Vanderbilt Mortgage & Finance Inc, et al. – ‘424B5’ on 11/24/99 re: Vanderbilt Mort & Fin Inc Man Ho Co Se Su Pa TH Ce S 1999D

On:  Wednesday, 11/24/99   ·   Accession #:  891092-99-761   ·   File #s:  333-75405, -01, -04

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Prospectus   —   Rule 424(b)(5)
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 1: 424B5       Pros. Supp.                                          147    878K 

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Prospectus Supplement                                                           
(To Prospectus dated November 23, 1999)                                         

$267,858,000
 (Approximate)

 Vanderbilt Mortgage and Finance, Inc.
 Seller and Servicer

 Manufactured Housing Contract
Senior/Subordinate Pass-Through Certificates, Series 1999D

  You should consider the risk factors  starting on page S-11 of this prospectus
supplement and page 4 of the prospectus.                                    

  The certificates  represent obligations of the trust only and do not represent
  an interest in or  obligation of Vanderbilt  Mortgage and Finance,  Inc.,  The
  Bank of New York or any of  their  affiliates  (except  to the  extent  of the
  limited  guarantee of the Class I B-2 and Class II B-4 Certificates by Clayton
Homes, Inc.).                                                               

  This prospectus supplement may be used to offer and sell the certificates only
if accompanied by the prospectus.                                           

The Trust Fund will:                                                            
o Issue eleven Classes of offered certificates described in the table below.    

o Consist primarily of manufactured housing installment sales contracts and     
installment loan agreements.                                                

o Make an election to be treated as a REMIC for federal income tax purposes.    

The Certificates:                                                               

o Represent ownership interests in a trust fund.                                

o Include the Group I Certificates which generally relate to the fixed rate     
contracts and the Group II Certificates which generally relate to the       
adjustable rate contracts.                                                  

o Currently have no trading market.                                             

o Receive distributions on the 7th day of each month (or if such day is not a   
business day, the next business day) beginning on December 7, 1999.         

                                                        [Enlarge/Download Table]


                                       Original                                                               
                                      Certificate           Price to         Underwriting       Proceeds to   
Offered Certificates                    Balance              Public            Discount        Vanderbilt(2)  
--------------------------------------------------------------------------------------------------------------
                                                                                                              
Class I A-1 Certificates .......... $ 43,000,000           100.000000%           0.200%         99.800000%    
Class I A-2 Certificates(1) ....... $ 31,000,000           100.000000%           0.250%         99.750000%    
Class I A-3 Certificates(1) ....... $ 26,000,000           100.000000%           0.300%         99.700000%    
Class I A-4 Certificates(1) ....... $ 25,483,000           100.000000%           0.410%         99.590000%    
Class I A-5 Certificates(1) ....... $  6,972,000           100.000000%           0.550%         99.450000%    
Class I M-1 Certificates(1) ....... $  6,197,000           100.000000%           0.650%         99.350000%    
Class I B-1 Certificates(1) ....... $  6,197,000            98.328125%           0.750%         97.578125%    
Class II A-1 Certificates ......... $100,522,000           100.000000%           0.255%         99.745000%    
Class II B-1 Certificates ......... $ 13,227,000           100.000000%           0.575%         99.425000%    
Class II B-2 Certificates ......... $  3,969,000           100.000000%           0.675%         99.325000%    
Class II B-3 Certificates ......... $  5,291,000           100.000000%           0.750%         99.250000%    
--------------------------------------------------------------------------------------------------------------
Total ............................. $267,858,000.00   $267,754,393.91      $869,943.90    $266,884,450.01     

(1) Plus accrued interest, if any, at the applicable rate from November 1, 1999.
(2) Before deducting expenses, estimated to be $250,000.                        

The underwriters named below will offer these securities to the public at the   
price to public set forth above and they will receive the discount listed above.

Neither the Securities and Exchange Commission nor any state securities         
commission has approved or disapproved these securities or determined if this   
prospectus supplement or the prospectus is accurate or complete. Any            
representation to the contrary is a criminal offense.                           

Prudential Securities                           Banc of America Securities LLC  

November 23, 1999                                                               

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    You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with   
information that is different. This document may only be used where it is legal 
to sell these securities. The information in this document may only be accurate 
on the date of this document.                                                   

      We provide information about the certificates to you through this document
which consists of two parts: (a) the accompanying prospectus, which provides    
general information, some of which may not apply to your certificates and (b)   
this prospectus supplement, which describes the specific terms of your          
certificates. This prospectus supplement may be used to offer and sell the      
certificates only if accompanied by the prospectus.                             

      If there is a conflict between the terms of this prospectus supplement and
the accompanying prospectus, you should rely on the information in this         
prospectus supplement.                                                          

This prospectus supplement and the accompanying prospectus include  
cross-references to captions in these materials where you can find further      
related discussions. The following table of contents and the table of contents  
included in the accompanying prospectus provide the pages on which these        
captions are located.                                                           

      We have filed preliminary information regarding the trust's assets and the
certificates with the Securities and Exchange Commission. The information       
contained in this document supersedes all of that preliminary information, which
was prepared by the underwriters for prospective investors.                     

 TABLE OF CONTENTS

                Page
                ----

PROSPECTUS SUPPLEMENT                               

Summary Information .........................  S-3                              
Risk Factors ................................ S-11                              
The Contract Pool ........................... S-15                              
Vanderbilt Mortgage and Finance, Inc. ....... S-26                              
Ratio of Earnings to Fixed Charges for CHI .. S-29                              
Yield and Prepayment Considerations ......... S-29                              
Description of the Certificates ............. S-50                              
Use of Proceeds ............................. S-76                              
Certain Federal Income Tax Consequences ..... S-76                              
State Tax Considerations .................... S-78                              
ERISA Considerations ........................ S-78                              
Legal Investment Considerations ............. S-79                              
Certificate Rating .......................... S-80                              
Underwriting ................................ S-80                              
Legal Matters ............................... S-81                              
Index of Defined Terms ...................... S-82                              
Annex I .....................................  I-1                              

                Page
                ----

PROSPECTUS                                

Important Notice About Information in this                                      
Prospectus and the Accompanying                                             
Prospectus Supplement .....................    2                            
Reports to Holders of the Certificates ......    2                              
Where You Can Find More Information .........    2                              
Risk Factors ................................    4                              
The Trust Fund ..............................    7                              
Use of Proceeds .............................    8                              
Vanderbilt Mortgage and Finance, Inc. .......    8                              
Underwriting Policies .......................    9                              
Yield Considerations ........................   10                              
Maturity and Prepayment Considerations ......   11                              
Description of the Certificates .............   11                              
Description of FHA Insurance and                                                
VA Guarantees .............................   25                            
Certain Legal Aspects of the Contracts ......   26                              
ERISA Considerations ........................   31                              
Certain Federal Income Tax Consequences .....   34                              
State and Local Tax Considerations ..........   53                              
Legal Investment Considerations .............   54                              
Ratings .....................................   54                              
Underwriting ................................   55                              
Legal Matters ...............................   55                              
Experts .....................................   55                              
Glossary ....................................   56                              

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 SUMMARY INFORMATION

    This summary highlights selected information from this document and does
not contain all of the information to make your investment decision. Please read
this entire prospectus supplement and the accompanying prospectus carefully for 
additional information about the Offered Certificates.                          

                                                        [Enlarge/Download Table]


                              Manufactured Housing Contract                                  
                     Senior/Subordinate Pass-Through Certificates,                           
                                      Series 1999D                                           

                                                                        Initial Rating of    
                                                                         Certificates(5)     
                           Original               Remittance         ------------------------
                        Class Principal              Rate             Moody's          Fitch 
Class                     Balance(1)              (per annum)         Rating          Rating 
-----                    -------------            -----------         -------         ------ 
                                                                                             
Offered Certificates                                                                         
Class I A-1              $ 43,000,000            LIBOR +0.20%(2)(3)    Aaa             AAA   
Class I A-2              $ 31,000,000                  6.815%(2)       Aaa             AAA   
Class I A-3              $ 26,000,000                  7.060%(2)       Aaa             AAA   
Class I A-4              $ 25,483,000                  7.320%(2)       Aaa             AAA   
Class I A-5              $  6,972,000                  7.755%(2)       Aa3             AA-   
Class I M-1              $  6,197,000                  8.050%(2)       A2               A    
Class I B-1              $  6,197,000                  8.750%(2)      Baa2             BBB   
Class II A-1             $100,522,000           LIBOR + 0.35%(3)(4)    Aaa             AAA   
Class II B-1             $ 13,227,000          LIBOR + 0.680%(3)(4)    Aa3             AA-   
Class II B-2             $  3,969,000           LIBOR + 1.35%(3)(4)    A2               A    
Class II B-3             $  5,291,000           LIBOR + 3.15%(3)(4)   Baa2             BBB   

Non-Offered Certificates                                                                     
Class I B-2              $ 10,070,000                  8.750%(2)      Baa2             BBB   
Class II B-4             $  9,259,000           LIBOR + 3.25%(3)(4)   Baa2             BBB   
Class R                       N/A                     N/A              N/A             N/A   

---------------                                                                 
(1) This amount is subject to a variance of plus or minus 5%.                   

(2) Subject to a maximum rate equal to (a) the weighted average contract rate of
  the Group I Contracts less (b) the applicable servicing fee (if Vanderbilt
Mortgage and Finance, Inc. is no longer the servicer).                  

(3) Interest will accrue at a variable rate based on one-month LIBOR plus the   
  applicable spread subject to certain caps described in "Description of the
Certificates--Distributions--Interest Distributions".                   

(4) The spread will increase if the option to repurchase the Contracts is not   
exercised. See "Description of the Certificates--Distributions--Interest
Distributions--Remittance Rates of the Certificates" herein.            

(5) A description of the ratings of the Certificates is set forth under the     
heading "Certificate Rating" in this prospectus supplement.             

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The Trust Fund                                                                  

A trust fund will be established pursuant to a pooling and servicing
agreement, dated as of October 26, 1999, among Vanderbilt Mortgage and Finance, 
Inc. ("Vanderbilt"), as seller and servicer, Clayton Homes, Inc. ("CHI"), as    
provider of the limited guarantee, and The Bank of New York, as trustee (the    
"Trustee").                                                                     

Seller                                                                          
     o Vanderbilt Mortgage and Finance, Inc. maintains its principal office at
500 Alcoa Trail, Maryville, Tennessee 37804. Its telephone number is (423)      
380-3000.                                                                       

Servicer                                                                        

o Vanderbilt Mortgage and Finance, Inc.                             

o The Servicer will service all of the Contracts either directly or 
through one or more sub-servicers.                                              

Trustee                                                                         

o The Bank of New York.                                             

Cut-off Date                                                                    

o October 26, 1999.                                                 

Closing Date                                                                    

o November 30, 1999.                                                

Remittance Date                                                                 

      o The 7th day of each month or if such day is not a business day, the next
business day. The first Remittance Date will be December 7, 1999.               

Designations                                                                    

o Offered Certificates--Class I A-1, Class I A-2, Class I A-3, Class I A-4,     
Class I A-5, Class I M-1, Class I B-1, Class II A-1, Class II B-1, Class II B-2 
and Class II B-3.                                                               

o Group I Certificates--Class I A-1, Class I A-2, Class I A-3, Class I A-4,     
Class I A-5, Class I M-1, Class I B-1 and Class I B-2.                          

o Group II Certificates--Class II A-1, Class II B-1, Class II B-2, Class II B-3 
and Class II B-4.                                                               

o Group I Senior Certificates--Class I A-1, Class I A-2, Class I A-3 and Class I
A-4.                                                                            

o Group II Senior Certificates--Class II A-1.                                   

o Senior Certificates--Class I A-1, Class I A-2, Class I A-3, Class I A-4 and   
Class II A-1.                                                                   

o Group I Subordinate Certificates--Class I A-5, Class I M-1, Class I B-1 and   
Class I B-2.                                                                    

o Group II Subordinate Certificates--Class II B-1, Class II B-2, Class II B-3   
and Class II B-4.                                                               

o Subordinate Certificates--Class I A-5, Class I M-1, Class I B-1, Class I B-2, 
Class II B-1, Class II B-2, Class II B-3 and Class II B-4.                      

o Fixed Rate Certificates--Class I A-2, Class I A-3, Class I A-4, Class I A-5,  
Class I M-1, Class I B-1 and Class I B-2.                                       

o Floating Rate Certificates--Class I A-1 and the Group II Certificates.        

The Contracts                                                                   

       The trust fund will consist of two separate pools of manufactured housing
installment sales contracts, installment loan agreements and mortgage loans (the
"Contracts"). Generally, the Group I Certificates relate to the fixed rate      
contracts (the "Group I Contracts") and the Group II Certificates relate to the 
adjustable rate contracts (the "Group II Contracts").                           

6,904 Contracts, with an aggregate unpaid principal balance of      
approximately $253,280,800.17 as of the Cut-off Date, are manufactured housing  
installment sales contracts or installment loan agreements originated by        
manufactured housing dealers and purchased by Vanderbilt from such dealers or   
originated directly by Vanderbilt. Certain of these dealers are affiliates of   
CHI.                                                                            

 Vanderbilt purchased the remaining Contracts from different financing
companies and financial institutions. A portion of such Contracts were          
originated or acquired by 21st Century Mortgage Corporation.                    

For additional information with respect to the Contracts, we refer you to the   
table below and "The Contract Pool" in this prospectus supplement for more      
detail.                                                                         

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 Summary of Contract
Characteristics as of the Cut-off Date
 (Approximate)

                                                        [Enlarge/Download Table]


All Contracts                                                                                                  

                                                                                                               
Pool Balance                                                                                    $287,188,126.63
Number of Contracts                                                                                       7,635
Average Contract Balance                                                                             $37,614.69
Location of homes                                                                                     44 states
Percentage by outstanding principal balance with Monthly Payments                                       73.528%
Percentage by outstanding principal balance with Bi-Weekly Payments                                     26.458%
Percentage by outstanding principal balance with Semi-Monthly Payments                                   0.014%

Group I Contracts                                                                                              

Pool Balance                                                                                    $154,919,226.84
Number of Contracts                                                                                       4,366
Average Contract Balance                                                                             $35,483.10
Weighted Average Annual Percentage Rate of Interest ("APR")                                             10.452%
Range of APRs                                                                                 7.750% to 18.000%
Weighted Average Original Term to Scheduled Maturity (at origination)                                241 months
Weighted Average Remaining Term to Scheduled Maturity (at Cut-off Date)                              238 months
Latest maturity date of any Group I Contract                                                   December 1, 2029

Group II Contracts*                                                                                            

Pool Balance                                                                                   $132,268,899.79 
Number of Contracts                                                                                      3,269 
Average Contract Balance                                                                            $40,461.58 
Percentage by outstanding principal balance with no Periodic Cap                                        0.069% 
Percentage by outstanding principal balance with Periodic Caps of 1%                                   41.437% 
Percentage by outstanding principal balance with Periodic Caps of 2%                                   58.494% 
Percentage by outstanding principal balance with no Lifetime Cap                                        0.069% 
Percentage by outstanding principal balance with a Lifetime Cap of 5% over the initial APR             21.129% 
Percentage by outstanding principal balance with a Lifetime Cap of 6% over the initial APR             78.802% 
Weighted Average APR as of the Cut-off Date                                                            10.180% 
Range of APR as of the Cut-off Date                                                          7.990% to 15.500% 
Weighted Average Maximum APR+                                                                          15.970% 
Range of Maximum APR+                                                                       12.990% to 21.500% 
Weighted Average Minimum APR++                                                                          4.487% 
Range of Minimum APR++                                                                        2.150% to 9.820% 
Weighted Average Gross Margin                                                                           4.487% 
Range of Gross Margins                                                                        2.150% to 9.820% 
Weighted Average Original Term to Scheduled Maturity (at origination)                               239 months 
Weighted Average Remaining Term to Scheduled Maturity (at Cut-off Date)                             238 months 
Latest maturity date of any Group II Contract                                                December 15, 2029 

*   The Group II Contracts are variable rate contracts that adjust annually     
(initially at the date set forth in the related Contract and at regular 
intervals thereafter). Except with respect to 2 Contracts, the Group II 
Contracts bear interest at a rate equal to the sum of (i) the monthly   
    average yield on U.S. Treasury securities adjusted to a constant maturity of
  five years and (ii) the Gross Margin set forth in the Contract, subject to
 rounding and the effects of the applicable Periodic Cap, Lifetime Cap and
Lifetime Floor.                                                         

+   Excludes loans with no Maximum APR.                                         

++  Assumes Minimum APR to be equal to the Gross Margin.                        

We refer you to "The Contract Pool" in this prospectus supplement for more      
detail.                                                                         

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Final Scheduled Remittance Dates                                                

The Final Scheduled Remittance Date of each                         
Class of Certificates is as follows:                                            

     Final Scheduled
Class                              Remittance Date                              
-----                              --------------                               

Class I A-1(1)                   January 7, 2008                                
Class I A-2(1)                   August 7, 2012                                 
Class I A-3(1)                   October 7, 2017                                
Class I A-4(1)                   September 7, 2025                              
Class I A-5(2)                   January 7, 2030                                
Class I M-1(2)                   January 7, 2030                                
Class I B-1(1)                   January 7, 2016                                
Class I B-2(2)                   January 7, 2030                                
Class II A-1(2)                  January 7, 2030                                
Class II B-1(1)                  January 7, 2017                                
Class II B-2(1)                  September 7, 2017                              
Class II B-3(1)                  June 7, 2018                                   
Class II B-4(2)                  January 7, 2030                                

(1)   Such determination of the Final Scheduled Remittance Dates is based on the
following assumptions: (i) there are no defaults, prepayments or    
    delinquencies with respect to payments due based on the Assumed Contract
Characteristics (set forth in "Yield and Prepayment Considerations" 
herein), (ii) the Seller or Servicer does not exercise its right to 
  purchase the Contracts and the related trust property when the current
balance of the Contracts declines below 10% of the balance of the   
  Contracts as of the Cut-off Date and (iii) excess interest collections
  from the Contracts (after payments of certain required amounts) is not
   used to make accelerated payments of principal to increase the level of
overcollateralization with respect to the Group II Certificates.    

(2)   The Final Scheduled Remittance Date for these Classes is the Remittance   
Date in the month following the date on which the Contracts with the
    latest scheduled maturity date in the relevant group amortizes according
to their terms.                                                     

It is anticipated that the actual final Remittance Date for each Class may occur
earlier than the Final Scheduled Remittance Date. In the event of large losses  
and delinquencies on the Contracts, however, the actual payment on certain of   
the subordinated classes of Certificates may occur later than the Final         
Scheduled Remittance Date and in certain scenarios, holders of such classes may 
incur a loss on their investment.                                               

    We refer you to "Yield and Prepayment Considerations" in this prospectus
supplement for more detail.                                                     

Priority of Distributions                                                       

Group I Certificates: Funds available from payments and other amounts received  
on the Group I Contracts on any Remittance Date (less certain expenses and      
reimbursements) will be distributed in the following order:                     

(i) to pay interest on the Group I Senior Certificates, at their    
respective Remittance Rates together with any previously undistributed          
shortfalls in interest due, on a pro rata basis;                                

 (ii) to pay principal on the Group I Senior Certificates in an amount
equal to the applicable class percentage of a formula amount dictated by        
principal payable on the Group I Contracts for the Remittance Date, in the      
following order of priority:                                                    

o Class I A-1                                                       

o Class I A-2                                                       

o Class I A-3                                                       

o Class I A-4;                                                      

 (iii) first, to pay interest and then to pay principal on the Classes
listed below, in an amount equal to the applicable class percentage of a formula
amount dictated by amount of principal payable on the Group I Contracts for that
Remittance Date, in the following order of priority:                            

o  Class I A-5                                                      

o  Class I M-1                                                      

o  Class I B-1                                                      

o  Class I B-2 (subject, in certain instances, to a floor set forth 
herein);                                                      

(iv) to pay shortfalls, if any, with respect to the Group II        
Certificates; and                                                               

(v) to increase overcollateralization to the required               
overcollateralization level with respect to the Group II Certificates.          

     After payment of the above, the remaining amounts received on the Group I
Contracts will be distributed to pay Vanderbilt (if Vanderbilt is the servicer) 
the servicing fee and to reimburse CHI with respect to any guarantee or         
enhancement payments, in the order of priority set forth herein. Remaining      
amounts will be paid to the holder of the Class R Certificate.                  

Group II Certificates: Funds available from payments and other amounts received 
on the Group II Contracts on any Remittance Date (less certain expenses and     
reimbursements) will be distributed in the following order:                     

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      (i) first to pay interest, and then to pay principal on the Classes listed
below in an amount equal to the applicable class percentage of a formula amount 
dictated by principal payable on the Group II Contracts for that Remittance     
Date, in the following order of priority:                                       

o Class II A-1                                                      

o Class II B-1                                                      

o Class II B-2                                                      

o Class II B-3                                                      

o Class II B-4 (subject, in certain instances, to a floor set forth 
herein)                                                         

(ii) to increase overcollateralization to the required              
overcollateralization level with respect to the Group II Certificates;          

      (iii) to pay shortfalls, if any, with respect to the Group I Certificates;
and                                                                             

      (iv) to any net funds cap carryover amounts (as further described herein),
on a pro rata basis.                                                            

      After payment of the above, the remaining amounts received on the Group II
Contracts will be distributed to pay Vanderbilt (if Vanderbilt is the servicer) 
the servicing fee and to reimburse CHI with respect to any guarantee or         
enhancement payments, in the order of priority set forth herein. Remaining      
amounts will be paid to the holder of the Class R Certificate.                  

We refer you to "Description of the Certificates --Distributions" in this       
prospectus supplement for more detail.                                          

Interest Distributions                                                          

     Interest accrues on the Fixed Rate Certificates during the calendar month
prior to the related Remittance Date on the basis of a 360-day year consisting  
of twelve 30-day months.                                                        

    Interest accrues on the Floating Rate Certificates (other than the first
Remittance Date) based on the actual number of days during the period from the  
Remittance Date in the prior month to the day preceding the related Remittance  
Date and a 360 day year.                                                        

On each Remittance Date, you will be entitled to the following:     

o     Interest at the related Remittance Rate that accrued during the accrual   
period.                                                             

o     Interest due on any prior Remittance Date that was not paid.              

  Your interest entitlement may be reduced as a result of prepayments or
losses on the Contracts.                                                        

We refer you to "Description of the Certificates -- Distributions -- Interest   
Distributions" in this prospectus supplement for more information.              

Principal Distributions                                                         

Group I Certificates:                                                           

o     On each Remittance Date, you will be entitled to receive principal        
    distributions in an amount equal to the applicable class percentage of a
     formula amount dictated by principal payable on the Group I Contracts for
that Remittance Date.                                               

o     Prior to the Remittance Date in December 2004, the applicable class       
    percentage for the Class I A Certificates is expected to be 100% and the
class percentage for the Class I M-1 and Class I B Certificates is  
    expected to be 0%. The Class I A Certificates will receive all principal
distributions in the order of priority set forth herein.            

o     Thereafter, assuming delinquencies, defaults and losses on the Group I    
  Contracts remain below certain thresholds, principal is expected to be
   distributed to the Class I A Certificates, Class I M-1 Certificates and
Class I B Certificates in proportion to their outstanding principal 
balances as further set forth herein.                               

o     Payments to the Class I B-2 Certificates are subject to a floor set forth 
      herein. If principal payments to the Class I B-2 Certificates would reduce
     the Class I B-2 Certificates below the floor such principal payments will
be reallocated to the more senior classes as set forth herein.      

We refer you to "Description of the Certificates --Distributions" in this       
prospectus supplement for more detail.                                          

Group II Certificates:                                                          

o     On each Remittance Date, you will be entitled to receive principal        
    distributions in an amount equal to the applicable class percentage of a
      formula amount dictated by principal payable on the Group II Contracts for
that Remittance Date.                                               

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o     Prior to the Remittance Date in December 2004, the applicable class       
   percentage for the Class II A-1 Certificates is expected to be 100% and
      the class percentage for the Class II B Certificates is expected to be 0%.

o     Thereafter, principal is expected to be distributed to the Class II A-1   
  Certificates and Class II B Certificates (in the order of priority set
  forth herein) in proportion to their outstanding principal balances as
further set forth herein.                                           

o     Payments to the Class II B-4 Certificates are subject to a floor set forth
herein. If principal payments to the Class II B-4 Certificates would
reduce the Class II B-4 Certificate below the floor, such principal 
payments will be reallocated to the more senior classes as set forth
herein.                                                             

We refer you to "Description of the Certificates -- Distributions" in this      
prospectus supplement for more detail.                                          

Credit Enhancement                                                              

   Credit enhancement in the form of subordination should reduce delays in
distributions and losses on certain classes of certificates. The subordination  
feature will support the classes of certificates in varying degrees.            

Group I Certificates                                                            

A.    Subordination                                                             

There are two types of subordination with respect to the Group I    
Certificates:                                                                   

1.    The Group I Senior Certificates will receive distributions of interest    
      prior to distributions of interest made to the other Group I Certificates.
     Until certain distribution tests are met, the Group I Senior Certificates
will receive distributions of principal prior to distributions of   
 principal made to the Group I Subordinate Certificates. Also, on each
Remittance Date, each class of Group I Subordinate Certificates will
      generally receive its interest and principal distribution in the following
order: Class I A-5, Class I M-1, Class I B-1 and Class I B-2; and   

2.    Losses resulting from the liquidation of defaulted Group I Contracts will 
be absorbed by the Group I Subordinate Certificates in the following
order: Class I B-2, Class I B-1, Class I M-1 and Class I A-5.       

We refer you to "Description of the Certificates -- Group I Certificates and the
Senior/Subordinate Structure" and "--Losses on Liquidated Contracts" in this    
prospectus supplement for more detail.                                          

B.    Cross Collateralization Provisions                                        

      Excess amounts generated by the Group II Contracts will fund shortfalls in
the Group I available funds, subject to certain prior requirements  
relating to the Group II Certificates.                              

We refer you to "Description of the Certificates-- Cross Collateralization      
Provisions" in this prospectus supplement for more detail.                      

Group II Certificates                                                           

A.    Subordination                                                             

There are two types of subordination with respect to the Group II   
Certificates:                                                                   

1. The Class II A-1 Certificates will receive distributions of interest prior   
to distributions of interest made to the Class II B Certificates. Until   
certain distribution tests are met, the Class II A-1 Certificates will    
 receive distributions of principal prior to distributions of principal made
 to the Class II B Certificates. Also, on each Remittance Date each class of
  Class II B Certificates will receive its interest and principal distribution
before any other class of Class II B Certificates with a higher numerical 
class designation; and                                                    

2. Losses resulting from the liquidation of defaulted Group II Contracts will be
 absorbed by the Class II B Certificates in reverse order of numerical class
designation.                                                              

We refer you to "Description of the Certificates-- Group II Certificates and the
Senior Subordinate Structure" and "--Losses on Liquidated Contracts" in this    
prospectus supplement for more detail.                                          

B.    Overcollateralization;                                                    
Excess Interest Collections                                         
to Increase Overcollateralization                                   

    Overcollateralization refers to the actual amount by which the aggregate
principal balance of the Group II Contracts exceeds the aggregate   
      principal balance of the Group II Certificates. This excess is intended to
protect against any shortfalls in required payments on the Group II 
Certificates.                                                       

      In certain instances, excess interest collections shall be applied to make
accelerated payments                                                

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of principal to the Class of Group II Certificates then entitled to 
   receive principal. This will cause the outstanding principal balance of
      the Group II Certificates to decrease faster than the principal balance of
 the Group II Contracts, thereby increasing the overcollateralization.

If the overcollateralization is greater than the required           
overcollateralization (which will vary throughout the life of the   
      Certificates), certain amounts will not be applied to reduce the principal
     balance of the Group II Certificates and will be distributed as set forth
herein.                                                             

     We refer you to "Description of the Certificates-- Group II Certificates;
    Overcollateralization Provisions" in this prospectus supplement for more
detail.                                                             

C.    Cross Collaterization Provisions                                          

     Excess amounts generated by the Group I Contracts may fund shortfalls and
   accelerate principal payments for the Group II Certificates, subject to
certain prior requirements relating to the Group I Certificates.    

We refer you to "Description of the Certificates-- Cross Collateralization      
Provisions" in this prospectus supplement for more detail.                      

Optional Repurchase                                                             

If the aggregate pool scheduled principal balance of the Contracts declines     
below 10% of the aggregate pool principal balance as of the Cut-off Date, then  
the Servicer and the Seller (if the Seller is no longer Servicer) each have the 
option to purchase all of the Contracts and the other property in the Trust. If 
the Servicer or Seller purchases all of the Contracts, you will receive a final 
distribution and then the Trust will be terminated.                             

We refer you to "Description of the Certificates-- Optional Termination" in this
prospectus supplement for more detail.                                          

Limited Guarantee of CHI                                                        

CHI will guarantee the payment of interest and principal on the Class I B-2 and 
Class II B-4 Certificates. No other Certificates have the benefit of this       
guarantee.                                                                      

The limited guarantee, if applicable, will be an unsecured general              
obligation of CHI and will not be supported by any letter of credit or other    
enhancement arrangement. See "Incorporation of Certain Documents of CHI by      
Reference" in the Prospectus.                                                   

At CHI's option and subject to certain conditions, such limited guarantee may be
replaced by an alternate credit enhancement. Such credit enhancement may consist
of cash or securities deposited by CHI or any other person in a segregated      
escrow, trust or collateral account or a letter of credit, certificate insurance
policy or surety bond provided by a third party.                                

We refer you to "Description of the Certificates-- Limited Guarantee of CHI" and
"-- Alternate Credit Enhancement" in this prospectus supplement for more detail.

Advances                                                                        

If the Servicer reasonably believes that cash advances can be recovered from a  
delinquent obligor then the Servicer will make cash advances to the Trust Fund  
to cover delinquent scheduled payments on the Contracts. The Servicer will make 
advances to maintain a regular flow of scheduled interest and principal payments
on the Certificates, not to guarantee or insure against losses. The Trust Fund  
will reimburse the Servicer for such advances.                                  

We refer you to "Description of the Certificates-- Advances" in this prospectus 
supplement for more detail.                                                     

Federal Income Tax Consequences                                                 

For federal income tax purposes:                                                

o     An election will be made to treat the Trust Fund as a "real estate        
mortgage investment conduit," or REMIC.                             

o     Each class of Certificates other than the Class R Certificate will be     
    "regular interests" in the REMIC and will be treated as debt instruments
of the REMIC.                                                       

o     The Class R Certificate will represent the beneficial ownership of the    
      sole class of "residual interest" in the REMIC. Certain types of investors
may not purchase the Class R Certificate.                           

We refer you to "Certain Federal Income Tax Consequences" in this prospectus    
supplement and in the prospectus for more detail.                               

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ERISA Considerations                                                            

The fiduciary responsibility provisions of the Employee Retirement Income       
Security Act of 1974 (ERISA) and Section 4975 of the Internal Revenue Code of   
1986 (the Code) can limit investments by certain pension and other employee     
benefit plans. For example, the acquisition of Certificates by certain plans may
be considered a "prohibited transaction" under ERISA; however, certain          
exemptions from the prohibited transactions rules could apply. If you are a     
fiduciary of a pension or other employee benefit plan which is subject to ERISA 
or section 4975 of the Code, you should consult with your counsel regarding the 
applicability of the provisions of ERISA and the Code before purchasing a       
Certificate.                                                                    

Subject to the considerations and conditions described under "ERISA             
Considerations" in this prospectus supplement and prospectus, it is expected    
that pension or employee benefit plans subject to ERISA or Section 4975 of the  
Code may purchase the Class I A-1, Class I A-2, Class I A-3, Class I A-4 and    
Class II A-1 Certificates.                                                      

We refer you to "ERISA Considerations" in this prospectus supplement and in the 
prospectus.                                                                     

Legal Investment                                                                

The Class II A-1 and Class II B-1 Certificates will be "mortgage related        
securities" for purposes of the Secondary Mortgage Market Enhancement Act of    
1984 ("SMMEA"), as long as they are rated in one of the two highest rating      
categories by at least one nationally recognized statistical rating             
organization.                                                                   

The other Certificates will not be "mortgage related securities" for purposes of
SMMEA.                                                                          

We refer you to "Legal Investment Considerations" in this prospectus supplement 
and in the prospectus for more detail.                                          

Certificate Rating                                                              

The Trust Fund will not issue the Offered Certificates unless they have been    
assigned the ratings designated on page S-3.                                    

A rating is not a recommendation to buy, sell or hold securities and may be     
subject to revision or withdrawal at any time by either rating agency.          

We refer you to "Certificate Rating" in this prospectus supplement for more     
detail.                                                                         

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RISK FACTORS

 You should carefully consider the following risk factors prior to any
purchase of certificates. You should also carefully consider the information set
forth under "Risk Factors" in the prospectus.                                   

Prepayments on Contracts May Adversely Affect Yield of Offered Certificates     

The rate of principal distributions and the average life of your    
Certificates will be directly related to the rate of principal payments on the  
Contracts. Obligors may prepay a Contract in full or in part at any time. The   
Contracts do not impose any prepayment penalties. For example, the rate of      
principal payments on the Contracts will be affected by the following:          

o   the amortization schedules of the Contracts;              

       o   partial prepayments and prepayments resulting from refinancing by
obligors;                                             

o   liquidations of defaulted Contracts by the Servicer;      

o   repurchases of Contracts by the Seller due to defective   
            documentation or breaches of representations and warranties in the
pooling and servicing agreement; and                  

   o   the optional purchase by the Seller or Servicer of all of the
    Contracts in connection with the termination of the Trust.

 Prepayments on the Contracts are influenced by a variety of economic,
geographic, social and other factors. For example, if interest rates for similar
contracts fall below the interest rates on the Contracts, the rate of prepayment
would generally be expected to increase. Conversely, if interest rates on       
similar contracts rise above the interest rates on the Contracts, the rate of   
prepayment would generally be expected to decrease.                             

    We cannot predict the rate at which obligors will repay their contracts.
Please consider the following:                                                  

       o   If you are purchasing a Certificate at a discount, your yield may
             be lower than expected if principal payments on the Contracts occur
at a slower rate than you expected.                   

         o   If you are purchasing a Certificate at a premium, your yield may be
             lower than expected if principal payments on the Contracts occur at
a faster rate than you expected.                      

       o   The earlier a payment of principal occurs, the greater the impact
        on your yield. For example, if you purchase a Certificate at a
     premium, although the average rate of principal payments is
     consistent with your expectations, if the rate of principal
         payments occurs initially at a rate higher than expected, which
          would adversely impact your yield, a subsequent reduction in the
      rate of principal payments will not offset any adverse yield
effect.                                               

       o   In addition, in the event a Contract is prepaid in full, interest
             on such Contract will cease to accrue on the date of prepayment. If
           such prepayments and related interest shortfalls are sufficiently
       high in a month, with respect to a group of Certificates, the
          amount available for the next Remittance Date could be less than
             the amount of principal and interest that would be distributable to
   the applicable Certificateholders, in the absence of such
shortfalls.                                           

    We refer you to "Yield and Prepayment Considerations" in this prospectus
supplement for more detail.                                                     

Risks of Holding Subordinate Certificates                                       

The protections afforded the Senior Certificates in this transaction
create risks for the Subordinate Certificates. Before purchasing Subordinate    
Certificates, you should consider the following factors that may negatively     
impact your yield:                                                              

       o    Because the Subordinate Certificates receive distributions after
              the Senior Certificates, there is a greater likelihood that one or
         more classes of Subordinate Certificates will not receive the
            distributions to which they are entitled on any Remittance Date.

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    o   If the Servicer determines not to advance a delinquent payment
            because such amount is not recoverable from an obligor, there will
        be a shortfall in distributions on the Certificates which will
initially impact the Subordinate Certificates.        

      o   The Subordinate Certificates are not entitled to a proportionate
    share of principal payments on the Contracts until (a) the
        beginning of the fifth year after the Closing Date and (b) the
    satisfaction of certain delinquency and performance tests.

       o   With respect to each Group of Certificates, losses resulting from
           the liquidation of defaulted Contracts will initially be absorbed
            by the related Subordinate Certificates. The liquidation losses on
        the Group I Contracts and resulting deficiencies in the amount
       available to pay the Group I Certificates will, in effect, be
           absorbed by the Group I Subordinate Certificates in the following
           order: Class I B-2, Class I B-1, Class I M-1 and Class I A-5. The
    liquidation losses on the Group II Contracts and resulting
  deficiencies in the amount available to pay the Group II
   Certificates will, in effect, be absorbed by the Group II
        Subordinate Certificates in the following order: Class II B-4,
Class II B-3, Class II B-2 and Class II B-1.          

        o   The earlier a loss on a Contract occurs, the greater the impact on
yield.                                                

      o   The risks presented in this section are more severe for the more
             subordinate classes of Certificates (i.e. Class I B-1, Class I B-2,
  Class II B-3 and Class II B-4 Certificates). No class of
     Subordinate Certificates will receive a distribution on any
      Remittance Date prior to the class or classes of Subordinate
            Certificates of a higher priority. With limited exceptions, losses
      on the Contracts are allocated to the most junior classes of
           Certificates outstanding. In addition, if losses on the Contracts
     exceed certain levels, the amounts that these classes would
             otherwise receive will be distributed to the classes of Subordinate
Certificates with a higher priority.                  

     Please review "Description of the Certificates" and "Yield and Prepayment
Considerations" in this prospectus supplement for more detail.                  

Limited Source of Payments - No Recourse to Seller, Servicer or Trustee         

   The Contracts are the sole source of distributions for the Certificates
(except to the extent of the limited guarantee or alternate credit enhancement  
in respect to the Class I B-2 and Class II B-4 Certificates). The Certificates  
do not represent an interest in or obligation of the Seller, the Servicer, the  
Trustee or any of their affiliates, except for (i) the limited obligations of   
the Seller with respect to certain breaches of its representations and          
warranties, (ii) the Servicer with respect to its servicing obligations and     
(iii) CHI, as the provider of the Limited Guarantee with respect to the Class I 
B-2 and Class II B-4 Certificates. Neither the Certificates nor the Contracts   
will be guaranteed by or insured by any governmental agency or instrumentality, 
the Seller, the Servicer, the Trustee or any of their affiliates (except to the 
extent of the limited guarantee in respect to the Class I B-2 and Class II B-4  
Certificates). Consequently, if payments on the Contracts are insufficient to   
make all payments required on the Certificates you may incur a loss on your     
investment.                                                                     

Limited Guarantee of CHI is an Unsecured General Obligation of CHI              

The Limited Guarantee, if applicable, will be an unsecured general  
obligation of CHI and will not be supported by any letter of credit or other    
enhancement arrangement.                                                        

See "Where You Can Find More Information" in the prospectus.        

Alternate Credit Enhancement may be Exhausted and Result in Losses              

If CHI has replaced the Limited Guarantee with an Alternate Credit  
Enhancement and such Alternate Credit Enhancement is exhausted, CHI has no      
obligation to replace such enhancement. Consequently, the Class I B-2 and Class 
II B-4 Certificates may bear a greater risk relating to losses on the Contracts 
than if the Limited Guarantee was in place and CHI was able to make payments    
pursuant to the Limited Guarantee.                                              

Lack of Secondary Market for the Offered Certificates                           

     The Underwriters intend to make a market for the purchase and sale of the
Offered Certificates after their initial issuance but have no obligation to do  
so. There is currently no secondary market for the Offered                      

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Certificates. We cannot give you any assurance that such a secondary market will
develop or, if it develops, that it will continue. Consequently, you may not be 
able to sell your Certificates readily or at prices that will enable you to     
realize your desired yield. Your limited ability to resell your certificates    
could adversely affect the market value of your certificates and result in      
losses to you.                                                                  

      The secondary markets for asset backed securities have experienced periods
of illiquidity and can be expected to do so in the future. Illiquidity can have 
a severely adverse effect on the prices of securities that are especially       
sensitive to prepayment, credit or interest rate risk, or that have been        
structured to meet the investment requirements of limited categories of         
investors.                                                                      

    In addition, the Group I Certificates and the Class II B-2, Class II B-3
and Class II B-4 Certificates will not constitute "mortgage related securities" 
for purposes of the Secondary Mortgage Market Enhancement Act of 1984 ("SMMEA").
Accordingly, many institutions with legal authority to invest in SMMEA          
securities will not be able to invest in such Certificates, limiting the market 
for such securities.                                                            

Geographic Concentration and Depreciation in Value of Manufactured Homes        

   An investment in the Certificates evidencing interests in the Contracts
may be affected by, among other things, a downturn in regional or local economic
conditions. These regional or local economic conditions are often volatile and  
historically have affected the delinquency, loan loss and repossession          
experience of manufactured housing installment sales contracts. The geographic  
location of the Manufactured Homes is set forth in "The Contract Pool" herein.  

Moreover, regardless of its location, manufactured housing generally
depreciates in value. Consequently, the market value of the Manufactured Homes  
could be or become lower than the principal balances of the related Contracts.  
See "The Contract Pool" herein.                                     

Certain Matters Relating to Insolvency                                          

      If Vanderbilt becomes involved in bankruptcy proceedings, distributions to
you could be delayed or reduced.                                                

 Please review "Risk Factors--If Vanderbilt Mortgage and Finance, Inc.
becomes insolvent, there may be delays or reductions in distributions on your   
certificates" in the prospectus for more detail.                                

Security Interests and Certain Other Aspects of the Contracts                   

    A variety of factors may limit the ability of the Servicer, on behalf of
the Certificateholders, to realize upon the Manufactured Homes or other property
securing the contracts or may limit the amount realized to less than the amount 
due.                                                                            
    See "Risk Factors--Risks relating to enforceability of the contracts" in
the prospectus.                                                                 

Consequences of Owning Book-Entry Certificates                                  

    Limit on Liquidity of Certificates. Issuance of the Offered Certificates
in book-entry form (the "Book-Entry Certificates") may reduce the liquidity of  
such certificates in the secondary trading market since investors may be        
unwilling to purchase certificates for which they cannot obtain physical        
certificates.                                                                   

Limit on Ability to Transfer or Pledge. Since transactions in the   
Book-Entry Certificates can be effected only though DTC, Cedel, Euroclear,      
participating organizations, indirect participants and certain banks, your      
ability to transfer or pledge a Book-Entry Certificate to persons or entities   
that do not participate in the DTC, Cedel or Euroclear system or otherwise to   
take actions in respect of such certificates, may be limited due to lack of a   
physical certificate representing the Book-Entry Certificates.                  

    Delays in Distributions. You may experience some delay in the receipt of
distributions on the Book-Entry Certificates since the distributions will be    
forwarded by the Trustee to DTC for DTC to credit the accounts of its           
participants which will thereafter credit them to your account either directly  
or indirectly through indirect participants, as applicable.                     

Please review "Description of the Certificates--Registration of the 
Offered Certificates" in this prospectus supplement for more detail.            

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Basis  Risk  with  Respect  to  the  Class  I  A-1  Certificates  and  Group  II
Certificates                                                                    

  With respect to the Group I Contracts, interest will accrue at a fixed
rate which may differ from the LIBOR based rate generally payable to the holders
of the Class I A-1 Certificates. Moreover, interest rates on the Group I        
Contracts do not adjust while the rate on the Class I A-1 Certificates does     
adjust. Accordingly, the amount of collections with respect to interest on the  
Group I Contracts available to pay interest on the Class I A-1 Certificates     
(which may have increased) and other amounts due on the Class I A-1 Certificates
during such period may be less than would be the case if the interest rates on  
the Group I Contracts matched the index and adjustment frequency of the Class I 
A-1 Certificates.                                                               

   With respect to the Group II Contracts, interest will accrue on indices
which may differ from the LIBOR based rates generally payable to the holders of 
the Group IICertificates. Moreover, interest rates on the Group II Contracts    
generally adjust less frequently than the rates on the Group II Certificates.   
Accordingly, the amount of collections with respect to interest on the Group II 
Contracts available to pay interest on the Group II Certificates (which may have
increased) and other amounts due on the Group II Certificates during such period
may be less than would be the case if the interest rates on the Group II        
Contracts matched the index and adjustment frequency of the Group II            
Certificates.                                                                   

Risks Associated With Year 2000 Compliance                                      

      The Servicer is faced with the task of completing its goals for compliance
in connection with the year 2000 issue. The year 2000 issue is the result of    
prior computer programs being written using two digits to define the applicable 
year. Any computer programs that have time-sensitive software may recognize a   
date using "00" as the year 1900 rather than the year 2000. Any such occurrence 
could result in a major computer system failure or miscalculations. Although the
Servicer believes its computer systems are year 2000 compliant, it is presently 
engaged in various procedures to determine if the computer systems and software 
of its suppliers, customers, brokers and agents will be year 2000 compliant.    

In the event that the Servicer, any sub-servicer or any of their    
suppliers, customers, brokers or agents do not successfully and timely achieve  
year 2000 compliance, the Servicer's performance of its obligations under the   
pooling and servicing agreement could be adversely affected. This could result  
in delays in processing payments on the Contracts and could cause a delay in    
distributions to you.                                                           

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 THE CONTRACT POOL

      The  "Contracts"  consist of fixed  rate and  variable  rate  manufactured
housing  installment  sales  contracts  and  installment  loan  agreements  (the
"Manufactured Housing Contracts") and mortgage loans (the "Mortgage Loans"). The
Manufactured Housing Contracts are secured by security interests in manufactured
homes, as defined herein (the "Manufactured Homes"), purchased with the proceeds
of  the  Contracts   and,  with  respect  to  certain  of  the  Contracts   (the
"Land-and-Home  Contracts"),  secured  by liens on the real  estate on which the
related Manufactured Homes are located. The Mortgage Loans are secured by one-to
four-family  residential  properties  (the "Mortgaged  Properties").  All of the
Contracts  in the Trust  Fund (the  "Contract  Pool")  have  been  purchased  or
originated  by  Vanderbilt   Mortgage  and  Finance,   Inc.  (the  "Company"  or
"Vanderbilt").  The Contracts,  as of origination,  were secured by Manufactured
Homes or Mortgaged Properties located in 44 states. The statistical  information
presented in this Prospectus Supplement concerning the Contract Pool is based on
the Contract Pool of Contracts as of the Cut-off Date.                          

      A  description  of the  Company's  general  practice  with  respect to the
origination  or  purchase,  on an  individual  basis,  of  manufactured  housing
contracts is set forth under "Underwriting Policies" in the Prospectus.         

      Under the pooling  and  servicing  agreement  dated as of October 26, 1999
among the Seller, CHI and the Trustee (the "Agreement"),  the Manufactured Homes
are required to comply with the  requirements of certain federal  statutes which
generally would require the  Manufactured  Homes to have a minimum of 400 square
feet of  living  space  and a minimum  width of 102  inches  and to be of a kind
customarily  used at a fixed  location.  Such  statutes  would also  require the
Manufactured  Homes  to be  transportable  in one or more  sections,  built on a
permanent  chassis  and  designed  to be used  as  dwellings,  with  or  without
permanent   foundations,   when  connected  to  the  required   utilities.   The
Manufactured  Homes are also  required to include  the  plumbing,  heating,  air
conditioning,   and  electrical  systems  therein.  Management  of  the  Company
estimates  that in excess of 95% of the  Manufactured  Homes are used as primary
residences  by the Obligors  under the  Contracts  secured by such  Manufactured
Homes.                                                                          

      The Agreement  requires the Servicer to maintain hazard insurance policies
with  respect to each  Manufactured  Home  (other  than a  Manufactured  Home in
repossession)  in the amounts and manner set forth herein under  "Description of
the  Certificates--Servicing"  in the Prospectus.  Generally, no other insurance
will be maintained with respect to the Manufactured  Homes, the Contracts or the
Contract Pool.                                                                  

      The Company will cause to be conveyed to the Trustee the Contracts and all
rights to receive payments on the Contracts that have not been received prior to
October 26, 1999 (the "Cut-off Date"), including any such payments that were due
prior to such date but were not received prior to such date.  Payments due on or
after October 26, 1999,  that have been received by the Company prior to October
26,  1999 will be the  property of the Company and will not be part of the Trust
Fund.  The Servicer will retain  physical  possession of the Contract  documents
(other than certain  documents  related to the  Land-and-Home  Contracts and the
Mortgage Loans which will be held by a custodian on behalf of the Trustee).  See
"Description of the Certificates--Conveyance of Contracts" herein.              

      The Contract Pool will have an aggregate  outstanding principal balance as
of the Cut-off Date of $287,188,126.63  (subject to a permitted variance of plus
or minus 5%) (the "Cut-off  Date Pool  Principal  Balance")  consisting of 7,635
Contracts.  Each Contract was originated on or after July 29, 1989. 6,904 of the
Contracts,  having an aggregate  outstanding principal balance as of the Cut-off
Date of approximately $253,280,800.17, are manufactured housing installment sale
contracts  originated  by  manufactured  housing  dealers and  purchased  by the
Company from such dealers or originated by the Company. Certain of these dealers
are  affiliates  of CHI the parent of the  Company.  The Company  purchased  the
remaining 731 Contracts, having an aggregate outstanding principal balance as of
the  Cut-off  Date of  approximately  $33,907,326.46  from  different  financing
companies and financial institutions.                                           

      Approximately 8.01% of the Contracts (the "21st Century Contracts") having
an  aggregate   outstanding   principal  balance  as  of  the  Cut-off  Date  of
approximately  $23,006,963.82  were  originated  or  acquired  by  21st  Century
Mortgage Corporation,  a Delaware corporation ("21st Century"). 21st Century was
founded in 1995 for the  origination,  acquisition and servicing of manufactured
housing  contracts like the  Contracts.  Certain of the officers of 21st Century
were  previously  officers of the Company and the President of the Company is on
the Board of Directors of 21st Century.  CHI is a minority  stockholder  of 21st
Century.  21st Century will act as subservicer  for the 21st Century  Contracts.
The Servicer,  however,  will remain  primarily  liable for the servicing of the
21st Century Contracts.  The underwriting standards employed by 21st Century are
similar to the standards used by the Company.                                   

      While  the  21stCentury   Contracts  were  originated  using  underwriting
guidelines  similar to those of the Company,  there can be no assurance that the
losses and  delinquencies on the 21st Century  Contracts will not be higher than
the other Contracts.                                                            

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      Approximately  14.58% of the  Contracts  having an  aggregate  outstanding
principal  balance as of the Cut-off Date of  approximately  $41,886,021.92  are
re-financed   contracts   originated   by  the  Company.   Of  such   Contracts,
approximately  $16,111,089.87 by aggregate  outstanding  principal balance as of
the Cut-off Date are cash-out refinancings.                                     

      Approximately  11.85% of the  Contracts  having an  aggregate  outstanding
principal  balance as of the Cut-off Date of  approximately  $34,026,465.66  are
Land-and-Home Contracts.                                                        

      Approximately  2.49% of the  Contracts  having  an  aggregate  outstanding
principal balance of $7,144,948.45 are Mortgage Loans.                          

      Each Group I Contract  will bear a fixed  contract  rate of interest  (the
"APR").  Most of the  Contracts,  other than  "step-up  rate"  Contracts and the
Escalating  Principal  Payment  Contracts  described  below,  provide  for level
payments  over  the  entire  term of the  Contract.  The APR of a  step-up  rate
Contract  steps up on a particular  date from its initial APR. As of the Cut-off
Date  approximately  0.02% of the Contracts by aggregate  outstanding  principal
balance are step-up rate Contracts which are still bearing interest at less than
their maximum APR. With respect to such step-up rate Contracts, the total amount
and the  principal  portion of each  scheduled  payment is determined on a basis
that  would  cause  the  Contract  to be  fully  amortized  over its term if the
Contract  were to bear  interest  during its entire  term at its initial APR and
were to have level payments over its entire term. The total amount and principal
portion of each  scheduled  payment due once the  Contracts  are  bearing  their
respective  fully stepped-up rates is determined on a basis that would cause the
Contract (which would then be bearing interest at a stepped-up rate) to be fully
amortized over its remaining term on a level-payment basis.  Approximately 0.02%
of the Contracts by aggregate  outstanding  principal  balance as of the Cut-off
Date provide for one remaining rate increase and will increase by  approximately
1.21% within the next six months.  Vanderbilt  has  represented  that all of the
Contracts will be at their fully stepped-up rate by April 1, 2000.              

      Approximately  26.46% of the  Contracts  (the  "Bi-weekly  Contracts")  by
aggregate  outstanding  principal  balance as of the Cut-off Date have bi-weekly
scheduled  payments  of  principal  and  interest.  Approximately  0.01%  of the
Contracts  have  semi-monthly  scheduled  payments  of  principal  and  interest
("Semi-Monthly  Contracts").   The  remainder  of  the  Contracts  have  monthly
scheduled  payments of principal  and interest.  Under a Bi-weekly  Contract the
obligor authorizes the Company to automatically  debit the obligor's account for
the payment of each scheduled payment. If the obligor terminates such account or
the  authorization  of the Company to debit such  account,  then such  Bi-weekly
Contract is converted to a Contract with scheduled monthly payments.            

      Approximately  0.01% of the Contracts by aggregate  outstanding  principal
balance  as of the  Cut-off  Date  provide  for an annual  increase  in  monthly
payments  over the first five years of the term of the Contract with an original
Contract term of 36 years,  and none of the Contracts by  outstanding  principal
balance  as of the  Cut-off  Date  provide  for an annual  increase  in  monthly
payments  over the first five years of the term of the Contract with an original
Contract term of 21 years,  in each case  providing  initially for lower monthly
payments than if the contract were of a shorter amortization term (collectively,
the "Escalating Principal Payment Contracts").  The Escalating Principal Payment
Contracts  automatically convert to a shorter amortization term, and the monthly
payment increases  accordingly.  At year six, the monthly payment increases to a
level monthly  payment which fully  amortizes  the  remaining  principal  over a
twelve year term with respect to the 36-year  original  term or seven years with
respect  to the  21-year  term.  There  is no  period  in which  the  Escalating
Principal Payment Contracts have negative amortization.                         

      Each  Contract in Group I has a fixed annual  percentage  rate of interest
and, except for the Escalating  Principal Payment Contracts,  generally provides
for level payments over the term of such Contract. Each Contract in Group II has
an adjustable APR, as further  described  herein.  Each Contract fully amortizes
the principal balance of the Contract over the term of the Contract.  All of the
Contracts are actuarial  obligations.  The portion of each scheduled payment for
any Contract  allocable  to principal is equal to the total amount  thereof less
the portion allocable to interest.  The portion of each scheduled payment due in
a particular  month that is allocable to interest is a precomputed  amount equal
to one  month's  interest  (or 14  days'  interest  in the  case of a  Bi-weekly
Contract  and one-half of one month's  interest in the case of any  Semi-Monthly
Contract) on the principal  balance of the Contract,  which principal balance is
determined by reducing the initial principal balance by the principal portion of
all  scheduled  payments  that  were due in prior  months  (whether  or not such
scheduled   payments  were  timely  made)  and  all  prior   partial   principal
prepayments.  Thus, each payment allocated to a scheduled monthly,  bi-weekly or
semi-                                                                           

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monthly  payment of a Contract  will be applied to interest  and to principal in
accordance with such precomputed  allocation whether such scheduled payments are
received in advance of or  subsequent to the day of the month (or in the case of
a Bi-weekly  Contract or any  Semi-Monthly  Contract,  each day in the month) on
which each  scheduled  payment of  principal  and interest is due on a Contract,
exclusive  of any days of grace (the "Due Date").  All payments  received on the
Contracts  (other than  payments  allocated  to items other than  principal  and
interest or payments sufficient to pay the outstanding  principal balance of and
all accrued and unpaid interest on such Contracts) will be applied when received
to current and any previously  unpaid scheduled monthly payments in the order of
the Due Dates of such payments and any payments that exceed the amount necessary
to bring the Contract current are applied to the partial prepayment of principal
of the Contract.                                                                

      In  certain   instances,   the  Company   finances  the  purchase  of  the
Manufactured  Home and  takes as  additional  security  a  mortgage  on the real
property  on which the  Manufactured  Home is located  or, in certain  cases,  a
mortgage on other  property  pledged on behalf of the  obligor.  The Company may
also take a mortgage  on the real  property  on which the  Manufactured  Home is
located in lieu of a down payment in the form of cash or the value of a trade-in
unit,  or as  additional  security.  Approximately  19.76% of the  Contracts  by
outstanding  principal  balance as of the Cut-off Date are secured by a mortgage
on the real property on which the Manufactured Home is located in lieu of a down
payment in the form of cash or the value of a trade-in  unit. See "Certain Legal
Aspects of the Contracts" in the Prospectus.                                    

Group I Contracts                                                               

      As of the Cut-off Date, the aggregate outstanding principal balance of the
Group I Contracts will equal $154,919,226.84 (subject to a permitted variance of
plus or minus 5%) (the "Group I Cut-off Date Principal Balance").  58.74% of the
Group I Contracts by aggregate  outstanding  principal balance as of the Cut-off
Date are  secured by  Manufactured  Homes which were new at the time the related
Group I  Contracts  were  originated  and  41.26%  of the Group I  Contracts  by
aggregate  outstanding  principal  balance as of the Cut-off Date are secured by
Manufactured  Homes  which were used at the time the  related  Group I Contracts
were  originated.  Each Group I Contract  has an APR of at least  7.750% and not
more than 18.000%.  The weighted  average APR of the Group I Contracts as of the
Cut-off Date is  approximately  10.452%.  The Group I Contracts  have  remaining
maturities  as of the  Cut-off  Date of at least 35 months but not more than 360
months  and  original  maturities  of at least 36  months  but not more than 361
months.  As of the Cut-off Date,  the Group I Contracts  had a weighted  average
original term to scheduled  maturity of approximately 241 months, and a weighted
average remaining term to scheduled  maturity of approximately  238 months.  The
remaining  term to stated  maturity  of a Group I Contract  is as of the Cut-off
Date. The average  outstanding  principal balance of the Group I Contracts as of
the Cut-off Date was $35,483.10. The weighted average loan-to-value ratio at the
time  of  origination  of  the  Group  I  Contracts  was  approximately  85.34%.
Generally,  "value" in such  calculation is equal to the sum of the down payment
(which  includes the value  allocated  to any  trade-in  unit or land pledged as
additional security or in lieu of a down payment),  the original amount financed
on the related  Contract,  which may include sales and other taxes,  and, in the
case of a Land-and-Home Contract, the value of the land securing the Contract as
estimated by the dealer.  Manufactured Homes, unlike site-built homes, generally
depreciate  in  value,  and it has  been the  Company's  experience  that,  upon
repossession,  the market value of a  Manufactured  Home securing a manufactured
housing  contract is generally  lower than the principal  balance of the related
manufactured housing contract. The Group I Contracts are secured by Manufactured
Homes and/or real estate  located in 44 states.  Approximately  18.96%,  10.31%,
9.01%, 6.95%, 5.54%, and 5.51% of the Group I Contracts by aggregate outstanding
principal  balance as of the Cut-off Date were secured by Manufactured  Homes or
real  estate  located  in Texas,  Tennessee,  North  Carolina,  Michigan,  South
Carolina and Virginia,  respectively. No other state represented more than 4.86%
of the Group I Contracts by aggregate  outstanding  principal  balance as of the
Cut-off Date.                                                                   

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GROUP I STATISTICS

      Set forth below is a description of certain additional  characteristics of
the Group I Contracts as of the Cut-off Date. Percentages may not add to 100.00%
due to rounding. Totals may not add to aggregate balances due to rounding.      

      Geographical  Distribution of Manufactured Homes as of Origination - Group
I Contracts                                                                     

                                                        [Enlarge/Download Table]


                                                                                            Percentage of  
                                                                                          Group I Contracts
                                                     Number of      Aggregate Principal    by Outstanding  
                                                     Contracts      Balance Outstanding   Principal Balance
State                                           As of Cut-off Date  As of Cut-off Date   As of Cut-off Date
---------                                       ------------------  ------------------   ------------------
                                                                                                           
Alabama .......................................           69            $  2,096,504           1.35%       
Arizona .......................................          136               5,460,718           3.52        
Arkansas ......................................           50               1,770,055           1.14        
California ....................................           15                 891,690           0.58        
Colorado ......................................          110               4,059,301           2.62        
Connecticut ...................................            1                  21,570           0.01        
Delaware ......................................           22                 819,034           0.53        
Florida .......................................          172               7,524,031           4.86        
Georgia .......................................           98               3,512,776           2.27        
Idaho .........................................           16                 673,530           0.43        
Illinois ......................................           35               1,296,104           0.84        
Indiana .......................................           72               2,081,362           1.34        
Iowa ..........................................           66               2,126,232           1.37        
Kansas ........................................           21                 670,909           0.43        
Kentucky ......................................          139               4,119,050           2.66        
Louisiana .....................................          127               4,210,726           2.72        
Maryland ......................................           33               1,013,237           0.65        
Massachusetts .................................            4                 227,177           0.15        
Michigan ......................................          302              10,759,455           6.95        
Minnesota .....................................           95               3,225,697           2.08        
Mississippi ...................................           52               1,843,235           1.19        
Missouri ......................................          144               4,741,097           3.06        
Montana .......................................           10                 276,665           0.18        
North Carolina ................................          400              13,965,195           9.01        
North Dakota ..................................            8                 229,385           0.15        
Nebraska ......................................            3                 103,562           0.07        
Nevada ........................................            3                 122,830           0.08        
New Jersey ....................................            5                 305,902           0.20        
New Mexico ....................................           63               2,361,109           1.52        
New York ......................................           52               2,082,676           1.34        
Ohio ..........................................          125               3,699,199           2.39        
Oklahoma ......................................           45               1,538,275           0.99        
Oregon ........................................           28               1,082,959           0.70        
Pennsylvania ..................................           32               1,064,092           0.69        
South Carolina ................................          247               8,587,199           5.54        
South Dakota ..................................            2                  64,573           0.04        
Tennessee .....................................          479              15,972,868          10.31        
Texas .........................................          788              29,379,577          18.96        
Utah ..........................................            3                 230,218           0.15        
Virginia ......................................          232               8,542,097           5.51        
Washington ....................................            4                 286,670           0.19        
West Virginia .................................            5                 112,350           0.07        
Wisconsin .....................................           52               1,747,385           1.13        
Wyoming .......................................            1                  20,950           0.01        
                                                ------------            ------------         ------        
    Total .....................................        4,366            $154,919,227         100.00%       
                                                ============            ============         ======        

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 Years of Origination of Contracts - Group I Contracts

                                                        [Enlarge/Download Table]


                                                                                                 Percentage of  
                                                                                               Group I Contracts
                                                          Number of      Aggregate Principal    by Outstanding  
                                                          Contracts      Balance Outstanding   Principal Balance
Year of Origination                                  As of Cut-off Date  As of Cut-off Date   As of Cut-off Date
---------------------------------                    ------------------  ------------------   ------------------

                                                                                                                
1989 ...............................................            1            $     17,610             0.01%     
1991 ...............................................            2                  55,023             0.04      
1992 ...............................................            2                  62,486             0.04      
1993 ...............................................            6                 120,603             0.08      
1994 ...............................................            3                  81,369             0.05      
1995 ...............................................            6                 192,194             0.12      
1996 ...............................................           15                 464,560             0.30      
1997 ...............................................            4                 152,328             0.10      
1998 ...............................................          305              16,332,772            10.54      
1999 ...............................................        4,022             137,440,283            88.72      
                                                            -----             -----------           ------      
  Total ............................................        4,366            $154,919,227           100.00%     
                                                            =====             ===========          =======      

 Distribution of Original Contract Amounts - Group I Contracts

                                                        [Enlarge/Download Table]

                                                                                                 Percentage of   
                                                                                               Group I Contracts 
                                                          Number of      Aggregate Principal    by Outstanding   
                                                          Contracts      Balance Outstanding   Principal Balance 
   Original Contract Amount                          As of Cut-off date  As of Cut-off Date   As of Cut-off Date 
---------------------------                          ------------------  ------------------   -------------------
                                                                                                                 
 $  5,000.01  - $  10,000.00 .......................           99               $ 798,000             0.52%      
   10,000.01  -    15,000.00 .......................          297               3,770,498             2.43       
   15,000.01  -    20,000.00 .......................          424               7,434,346             4.80       
   20,000.01  -    25,000.00 .......................          560              12,612,703             8.14       
   25,000.01  -    30,000.00 .......................          591              16,201,974            10.46       
   30,000.01  -    35,000.00 .......................          532              17,247,719            11.13       
   35,000.01  -    40,000.00 .......................          402              14,978,427             9.67       
   40,000.01  -    45,000.00 .......................          375              15,871,168            10.24       
   45,000.01  -    50,000.00 .......................          291              13,717,346             8.85       
   50,000.01  -    55,000.00 .......................          217              11,336,159             7.32       
   55,000.01  -    60,000.00 .......................          152               8,686,377             5.61       
   60,000.01  -    70,000.00 .......................          117               7,247,127             4.68       
   65,000.01  -    75,000.00 .......................           83               5,573,525             3.60       
   70,000.01  -    80,000.00 .......................           57               4,107,177             2.65       
   75,000.01  -    85,000.00 .......................           38               2,921,331             1.89       
   80,000.01  -    90,000.00 .......................           38               3,137,085             2.02       
   85,000.01  -    95,000.00 .......................           23               1,995,694             1.29       
   90,000.01  -   100,000.00 .......................           24               2,145,742             1.39       
   95,000.01  -   105,000.00 .......................           14               1,354,295             0.87       
  100,000.01  -   110,000.00 .......................            8                 822,090             0.53       
  105,000.01  -   115,000.00 .......................            4                 430,398             0.28       
  110,000.01  -   120,000.00 .......................            3                 339,669             0.22       
  115,000.01  -   125,000.00 .......................            5                 589,442             0.38       
  120,000.01  -   130,000.00 .......................            1                 120,815             0.08       
  125,000.01  -   130,000.00 .......................            3                 379,102             0.24       
  130,000.01  -   140,000.00 .......................            4                 520,629             0.34       
  140,000.01  -   145,000.00 .......................            2                 283,281             0.18       
  145,000.01  -   150,000.00 .......................            2                 297,107             0.19       
                                                            -----            ------------           ------       
               Total ...............................        4,366            $154,919,227           100.00%      
                                                            =====            ============           ======       

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Distribution of Original Loan-to-Value Ratios(1) - Group I Contracts

                                                        [Enlarge/Download Table]


                                                                                                Percentage of  
                                                                                              Group I Contracts
                                                          Number of     Aggregate Principal    by Outstanding  
      Original                                           Contracts      Balance Outstanding   Principal Balance
 Loan-to-Value Ratio                                As of Cut-off Date  As of Cut-off Date   As of Cut-off Date
----------------------                              ------------------  ------------------   ------------------
                                                                                                               
Less than 61.000% .................................          285          $ 6,575,727                4.24%     
61.000% - 65.999% .................................          155            4,868,351                3.14      
66.000  - 70.999 ..................................          203            6,860,107                4.43      
71.000  - 75.999 ..................................          284            9,540,979                6.16      
76.000  - 80.999 ..................................          396           14,516,328                9.37      
81.000  - 85.999 ..................................          609           20,619,069               13.31      
86.000  - 90.999 ..................................        1,191           40,968,840               26.45      
91.000  -100.000 ..................................        1,243           50,969,826               32.90      
                                                      ----------         ------------          ----------      
  Total ...........................................        4,366         $154,919,227              100.00%     
                                                      ==========         ============          ==========      

---------------                                                                 
(1)  The definition of "Value" is set forth above.  Manufactured  Homes,  unlike
     site-built homes, generally depreciate in value, and it should generally be
     expected,  especially  with  Contracts  with high  loan-to-value  ratios at
     origination,  that any time after the origination of a Contract, the market
     value of the Manufactured Home securing such Contract may be lower than the
outstanding principal balance of such Contract.                       

 Cut-off Date Contract Rates - Group I Contracts

                                                        [Enlarge/Download Table]


                                                                                                Percentage of   
                                                                                              Group I Contracts 
                                                         Number of      Aggregate Principal    by Outstanding   
                                                         Contracts      Balance Outstanding   Principal Balance 
       Contract Rate                                As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
-----------------------                             ------------------  ------------------   -------------------
                                                                                                                
 7.001%     -    8.000% ...........................           31             $1,859,169              1.20%      
 8.001      -    9.000 ............................          318             15,290,275              9.87       
 9.001      -   10.000 ............................        1,374             57,121,107             36.87       
10.001      -   11.000 ............................        1,149             38,808,150             25.05       
11.001      -   12.000 ............................          772             22,756,569             14.69       
12.001      -   13.000 ............................          405             11,463,441              7.40       
13.001      -   14.000 ............................          258              6,364,544              4.11       
14.001      -   15.000 ............................           46              1,023,688              0.66       
15.001      -   16.000 ............................           11                215,471              0.14       
16.001      -   17.000 ............................            1                 11,745              0.01       
17.001      -   18.000 ............................            1                  5,069                 *       
                                                     -----------  ---------------------       -----------       
  Total ...........................................        4,366       $154,919,227                100.00%      
                                                     ===========  =====================       ===========       

---------------                                                                 
*     Indicates  an  amount  greater  than  zero but  less  than  0.005%  of the
 aggregate principal balance of the Contracts as of the Cut- off Date.

Remaining Months to Maturity - Group I Contracts

                                                        [Enlarge/Download Table]


                                                                                                Percentage of   
                                                                                              Group I Contracts 
                                                         Number of      Aggregate Principal    by Outstanding   
 Months Remaining                                        Contracts      Balance Outstanding   Principal Balance 
As of Cut-off Date                                  As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
------------------                                  ------------------  ------------------   -------------------
                                                                                                                
 12   -   72 ......................................        201            $  2,523,103             1.63%        
 73   -   84 ......................................        165               2,579,952             1.67         
 85   -  120 ......................................        506              10,669,023             6.89         
121   -  156 ......................................        459              12,117,275             7.82         
157   -  180 ......................................        687              20,184,303            13.03         
181   -  240 ......................................      1,220              45,849,855            29.60         
241   -  300 ......................................        486              24,587,184            15.87         
301   -  360 ......................................        642              36,408,532            23.50         
                                                         -----            ------------           ------         
  Total ...........................................      4,366            $154,919,227           100.00%        
                                                         =====            ============           ======         

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Group II Contracts                                                              

      As of the Cut-off Date, the aggregate outstanding principal balance of the
Group II  Contracts  will  equal  approximately  $132,268,899.79  (subject  to a
permitted  variance of plus or minus 5%) (the "Group  IICut-off  Date  Principal
Balance").  80.68% of the Group II Contracts by aggregate  outstanding principal
balance as of the Cut-off Date are secured by Manufactured  Homes which were new
at the time the related  Group II Contracts  were  originated  and 19.32% of the
Group II Contracts by aggregate  outstanding principal balance as of the Cut-off
Date are secured by  Manufactured  Homes which were used at the time the related
Group II Contracts were  originated.  All of the Group II Contracts are variable
rate  Contracts  that  adjust  annually  initially  at the date set forth in the
related Contract and at regular intervals  thereafter (each such date, a "Change
Date")  to equal  the sum of (i) the  monthly  average  yield  on U.S.  Treasury
securities  adjusted to a constant  maturity of five years as made  available by
the Federal  Reserve Board (the "Index") on a "lookback  date" (a date specified
in each  Contract  which  occurs up to a  specified  number of days  before  the
applicable  Change  Date) and (ii) the number of basis  points set forth in such
Contract  (the "Gross  Margin"),  subject to rounding  and to the effects of the
Periodic Cap, the applicable Lifetime Cap and the applicable Lifetime Floor. The
"Periodic  Cap"  limits  changes in the APR for each Group II  Contract  on each
Change Date.  The "Lifetime Cap" is the maximum APR that may be borne by a Group
II Contract over its life.  The "Lifetime  Floor" is the minimum APR that may be
borne by a Group II Contract  over its life and is equal to the Gross Margin for
such Group II Contract. Each Group II Contract has an APR of at least 7.990% and
not more than 15.500%.  The weighted average APR of the Group II Contracts as of
the Cut-off Date is approximately 10.180%. The Group II Contracts have remaining
maturities  as of the  Cut-off  Date of at least 48 months but not more than 360
months  and  original  maturities  of at least 48  months  but not more than 360
months.  As of the Cut-off Date,  the Group II Contracts had a weighted  average
original term to scheduled  maturity of approximately 239 months, and a weighted
average remaining term to scheduled  maturity of approximately  238 months.  The
remaining  term to stated  maturity  of a Group II Contract is as of the Cut-off
Date. The average outstanding  principal balance of the Group II Contracts as of
the Cut-off Date was $40,461.58. The weighted average loan-to-value ratio at the
time of  origination  of the Group II Contracts was  approximately  85.77%.  The
calculation  of the  loan-to-value  for the Group II  Contracts  is as set forth
under the "The Contract  Pool--Group I Contracts".  Manufactured  Homes,  unlike
site-built homes,  generally  depreciate in value, and it has been the Company's
experience  that,  upon  repossession,  the market value of a Manufactured  Home
securing a manufactured  housing  contract is generally lower than the principal
balance of the related manufactured housing contract. The Group II Contracts are
secured  by  Manufactured  Homes  and/or  real  estate  located  in  30  states.
Approximately 19.81%,  18.78%,  16.64%,  10.71%, 8.35% and 7.97% of the Group II
Contracts by aggregate outstanding principal balance as of the Cut-off Date were
secured  by  Manufactured  Homes  or real  estate  located  in  North  Carolina,
Tennessee, Texas, South Carolina, Virginia and Kentucky,  respectively. No other
state  represented  more  than  4.08% of the  Group II  Contracts  by  aggregate
outstanding principal balance as of the Cut-off Date.                           

      The Periodic Cap for the Group II Contracts other than 2 Contracts with no
Periodic  Caps  ranged  from 1% to 2% with a weighted  average of  approximately
1.585%. The Months to Interest Roll (with respect to each Group II Contract, the
number of months from the Cut-off Date to the next adjustment of the APR of such
Contract)  for the Group II Contracts as of the Cut-off Date ranged from 1 to 13
months with a weighted average of approximately 10 months.  The weighted average
Payment Roll  Frequency  (with  respect to each  Contract,  the number of months
between  adjustments of the APR) for all Group II Contracts was approximately 12
months.                                                                         

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 GROUP II STATISTICS

      Set forth below is a description of certain additional  characteristics of
the  Group II  Contracts  as of the  Cut-off  Date.  Percentages  may not add to
100.00%  due to  rounding.  Totals  may not  add to  aggregate  balances  due to
rounding.                                                                       

      Geographical  Distribution of Manufactured Homes as of Origination - Group
II Contracts                                                                    

                                                        [Enlarge/Download Table]


                                                                                                Percentage of   
                                                                                             Group II Contracts 
                                                         Number of      Aggregate Principal    by Outstanding   
                                                         Contracts      Balance Outstanding   Principal Balance 
State                                               As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
-----                                               ------------------  ------------------   -------------------
                                                                                                                
Alabama ...........................................           32             $ 1,348,929           1.02%        
Arizona ...........................................           17                 679,662           0.51         
Arkansas ..........................................           25                 942,128           0.71         
Colorado ..........................................           33               1,434,504           1.08         
Delaware ..........................................            5                 205,834           0.16         
Florida ...........................................          145               5,392,771           4.08         
Georgia ...........................................           53               1,908,660           1.44         
Illinois ..........................................            3                 101,647           0.08         
Indiana ...........................................           14                 471,027           0.36         
Iowa ..............................................            2                  58,149           0.04         
Kansas ............................................            1                  57,444           0.04         
Kentucky ..........................................          285              10,538,803           7.97         
Louisiana .........................................          118               4,479,316           3.39         
Maryland ..........................................            4                 173,974           0.13         
Michigan ..........................................            1                  41,587           0.03         
Mississippi .......................................           36               1,516,550           1.15         
Missouri ..........................................           28               1,098,959           0.83         
Nebraska ..........................................            2                  65,089           0.05         
New Jersey ........................................            1                  13,723           0.01         
New Mexico ........................................           21                 764,814           0.58         
New York ..........................................            4                 147,493           0.11         
North Carolina ....................................          577              26,196,343          19.81         
Ohio ..............................................           25                 939,242           0.71         
Oklahoma ..........................................           22                 807,518           0.61         
Pennsylvania ......................................            6                 286,881           0.22         
South Carolina ....................................          313              14,170,550          10.71         
Tennessee .........................................          637              24,837,643          18.78         
Texas .............................................          599              22,008,378          16.64         
Virginia ..........................................          248              11,039,522           8.35         
West Virginia .....................................           12                 541,760           0.41         
                                                           -----            ------------         ------         
  Total ...........................................        3,269            $132,268,900         100.00%        
                                                           =====            ============         ======         

Years of Origination of Contracts - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                                 Percentage of   
                                                                                              Group II Contracts 
                                                          Number of      Aggregate Principal    by Outstanding   
                                                          Contracts      Balance Outstanding   Principal Balance 
Year of Origination                                  As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
-------------------                                  ------------------  ------------------   -------------------
                                                                                                                 
1996 ...............................................            3              $ 119,938             0.09%       
1997 ...............................................            8                270,626             0.20        
1998 ...............................................           23                875,226             0.66        
1999 ...............................................        3,235            131,003,110            99.04        
                                                            -----           ------------           ------        
  Total ............................................        3,269           $132,268,900           100.00%       
                                                            =====           ============           ======        

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Distribution of Original Contract Amounts - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                                 Percentage of   
                                                                                              Group II Contracts 
                                                          Number of      Aggregate Principal    by Outstanding   
                                                          Contracts      Balance Outstanding   Principal Balance 
 Original Contract Amount                            As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
 ------------------------                            ------------------  ------------------   -------------------
                                                                                                                 
$  5,000.01     - $  10,000.00 .....................           34              $ 268,965              0.20%      
   10,000.01    -    15,000.00 .....................           86              1,104,394              0.83       
   15,000.01    -    20,000.00 .....................          174             3, 045,229              2.30       
   20,000.01    -    25,000.00 .....................          224              5,060,249              3.83       
   25,000.01    -    30,000.00 .....................          442             12,137,914              9.18       
   30,000.01    -    35,000.00 .....................          512             16,638,329             12.58       
   35,000.01    -    40,000.00 .....................          388             14,410,718             10.90       
   40,000.01    -    45,000.00 .....................          280             11,811,254              8.93       
   45,000.01    -    50,000.00 .....................          242             11,470,596              8.67       
   50,000.01    -    55,000.00 .....................          217             11,347,352              8.58       
   55,000.01    -    60,000.00 .....................          213             12,199,202              9.22       
   60,000.01    -    65,000.00 .....................          145              9,027,536              6.83       
   65,000.01    -    70,000.00 .....................          108              7,269,018              5.50       
   70,000.01    -    75,000.00 .....................           72              5,187,525              3.92       
   75,000.01    -    80,000.00 .....................           51              3,920,946              2.96       
   80,000.01    -    85,000.00 .....................           29              2,329,701              1.76       
   85,000.01    -    90,000.00 .....................           15              1,302,833              0.98       
   90,000.01    -    95,000.00 .....................           14              1,286,902              0.97       
   95,000.01    -   100,000.00 .....................            6                583,095              0.44       
  100,000.01    -   105,000.00 .....................            5                510,795              0.39       
  105,000.01    -   110,000.00 .....................            4                427,980              0.32       
  110,000.01    -   115,000.00 .....................            5                560,130              0.42       
  115,000.01    -   120,000.00 .....................            1                117,137              0.09       
  120,000.01    -   125,000.00 .....................            1                119,368              0.09       
  130,000.01    -   135,000.00 .....................            1                131,731              0.10       
                                                            -----           ------------            ------       
  Total ............................................        3,269           $132,268,900            100.00%      
                                                            =====           ============            ======       

 Distribution of Original Loan-to-Value Ratios(1) - Group II Contracts

                                                        [Enlarge/Download Table]

                                                                                               Percentage of  
                                                                                            Group II Contracts
                                                         Number of     Aggregate Principal    by Outstanding  
       Original                                         Contracts      Balance Outstanding   Principal Balance
  Loan-to-Value Ratio                              As of Cut-off Date  As of Cut-off Date   As of Cut-off Date
  -------------------                              ------------------  ------------------   ------------------
                                                                                                              
   Less than 61.000% .............................          107              $ 3,313,763          2.51%       
61.000% -    65.999% .............................           90                3,401,416          2.57        
66.000    -  70.999 ..............................          120                5,008,928          3.79        
71.000    -  75.999 ..............................          213                9,070,391          6.86        
76.000    -  80.999 ..............................          257               11,655,075          8.81        
81.000    -  85.999 ..............................          424               17,478,380         13.21        
86.000    -  90.999 ..............................        1,103               45,749,817         34.59        
91.000    -100.000 ...............................          955               36,591,129         27.66        
                                                          -----             ------------        ------        
 Total ...........................................        3,269             $132,268,900        100.00%       
                                                          =====             ============        ======        

---------------                                                                 
(1)  The definition of "Value" is set forth above.  Manufactured  Homes,  unlike
     site-built homes, generally depreciate in value, and it should generally be
     expected,  especially  with  Contracts  with high  loan-to-value  ratios at
     origination,  that any time after the origination of a Contract, the market
     value of the Manufactured Home securing such Contract may be lower than the
outstanding principal balance of such Contract.                       

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Cut-off Date Contract Rates - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                              Percentage of   
                                                                                           Group II Contracts 
                                                       Number of      Aggregate Principal    by Outstanding   
    Contract Rate                                      Contracts      Balance Outstanding   Principal Balance 
 As of Cut-off Date                               As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
 ------------------                               ------------------  ------------------   -------------------
                                                                                                              
 7.001%  -   8.000% .............................           284           $ 14,592,489            11.03%      
 8.001   -   9.000 ..............................           378             19,686,951            14.88       
 9.001   -  10.000 ..............................           647             27,690,644            20.94       
10.001   -  11.000 ..............................           903             34,186,248            25.85       
11.001   -  12.000 ..............................           703             25,272,307            19.11       
12.001   -  13.000 ..............................           272              8,739,175             6.61       
13.001   -  14.000 ..............................            76              1,980,782             1.50       
14.001   -  15.000 ..............................             5                 92,037             0.07       
15.001   -  16.000 ..............................             1                 28,267             0.02       
                                                          -----           ------------           ------       
  Total .........................................         3,269           $132,268,900           100.00%      
                                                          =====           ============           ======       

 Remaining Months to Maturity - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                              Percentage of   
                                                                                           Group II Contracts 
                                                       Number of      Aggregate Principal    by Outstanding   
 Months Remaining                                      Contracts      Balance Outstanding   Principal Balance 
As of Cut-off Date                                As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
------------------                                ------------------  ------------------   -------------------
                                                                                                              
 12   -   72 ....................................          45              $  524,352             0.40%       
 73   -   84 ....................................          50                 762,209             0.58        
 85   -  120 ....................................         147               3,153,041             2.38        
121   -  156 ....................................         334               8,780,107             6.64        
157   -  180 ....................................         468              14,813,078            11.20        
181   -  240 ....................................       1,379              55,518,451            41.97        
241   -  300 ....................................         587              32,668,636            24.70        
301   -  360 ....................................         259              16,049,025            12.13        
                                                        -----            ------------           -------       
  Total .........................................       3,269            $132,268,900           100.00%       
                                                        =====            ============           ======        

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 Distribution of Lifetime Cap - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                           Percentage of   
                                                                                        Group II Contracts 
                                                    Number of      Aggregate Principal    by Outstanding   
                                                    Contracts      Balance Outstanding   Principal Balance 
     Lifetime Cap                              As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
     ------------                              ------------------  ------------------   -------------------
                                                                                                           
No Cap .......................................            2              $ 90,936              0.07%       
12.501%   -     13.000% ......................           64             2,944,985              2.23        
13.001    -     13.500 .......................           67             3,038,511              2.30        
13.501    -     14.000 .......................          230            12,039,421              9.10        
14.001    -     14.500 .......................          233            12,157,986              9.19        
14.501    -     15.000 .......................          171             7,966,512              6.02        
15.001    -     15.500 .......................          293            11,978,993              9.06        
15.501    -     16.000 .......................          462            19,041,860             14.40        
16.001    -     16.500 .......................          566            22,193,761             16.78        
16.501    -     17.000 .......................          314            11,725,172              8.86        
17.001    -     17.500 .......................          295            10,399,171              7.86        
17.501    -     18.000 .......................          306            10,525,261              7.96        
18.001    -     18.500 .......................          161             5,426,004              4.10        
18.501    -     19.000 .......................           40             1,166,762              0.88        
19.001    -     19.500 .......................           35               948,165              0.72        
19.501    -     20.000 .......................           25               530,520              0.40        
20.001    -     20.500 .......................            3                60,925              0.05        
20.501    -     21.000 .......................            1                 5,688                 *        
21.001    -     21.500 .......................            1                28,267              0.02        
                                                      -----          ------------            ------        
  Total ......................................        3,269          $132,268,900            100.00%       
                                                      =====          ============            ======        

--------------                                                                  
*    Indicates an amount greater than zero but less than 0.005% of the aggregate
principal balance of the Contracts as of the Cut- off Date.           

Distribution of Gross Margins - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                        Percentage of   
                                                                                     Group II Contracts 
                                                 Number of      Aggregate Principal    by Outstanding   
                                                 Contracts      Balance Outstanding   Principal Balance 
    Gross Margin                            As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
    ------------                            ------------------  ------------------   -------------------
                                                                                                        
2.001%  -     2.500% ......................          249            $ 13,172,956              9.96%     
2.501   -     3.000 .......................          328              16,581,202             12.54      
3.001   -     3.500 .......................          103               4,841,758              3.66      
3.501   -     4.000 .......................          194               8,564,099              6.47      
4.001   -     4.500 .......................          475              20,314,303             15.36      
4.501   -     5.000 .......................          581              22,468,383             16.99      
5.001   -     5.500 .......................          343              12,513,931              9.46      
5.501   -     6.000 .......................          307              11,252,657              8.51      
6.001   -     6.500 .......................          360              12,670,762              9.58      
6.501   -     7.000 .......................          198               6,298,864              4.76      
7.001   -     7.500 .......................           56               1,671,721              1.26      
7.501   -     8.000 .......................           40               1,080,990              0.82      
8.001   -     8.500 .......................           28                 701,061              0.53      
8.501   -     9.000 .......................            4                  76,832              0.06      
9.001   -     9.500 .......................            1                  25,424              0.02      
9.501   -    10.000 .......................            2                  33,955              0.03      
                                                   -----            ------------            ------      
 Total ....................................        3,269            $132,268,900            100.00%     
                                                   =====            ============            ======      

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Distribution of Next Contract Rate Change - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                                 Percentage of   
                                                                                              Group II Contracts 
                                                          Number of      Aggregate Principal    by Outstanding   
     Date of Next                                         Contracts      Balance Outstanding   Principal Balance 
 Contract Rate Change                                As of Cut-off Date  As of Cut-off Date   As of Cut-off Date 
 --------------------                                ------------------  ------------------   -------------------
                                                                                                                 
December 1, 1999 ...................................            4              $ 187,142               0.14%     
January 1, 2000 ....................................            1                 33,855               0.03      
February 1, 2000 ...................................            3                142,526               0.11      
March 1, 2000 ......................................            1                 27,744               0.02      
May 1, 2000 ........................................            3                128,764               0.10      
June 1, 2000 .......................................            6                280,020               0.21      
July 1, 2000 .......................................           51              2,130,273               1.61      
August 1, 2000 .....................................          815             32,172,971              24.32      
September 1, 2000 ..................................        1,116             44,650,537              33.76      
October 1, 2000 ....................................          997             40,911,915              30.93      
November 1, 2000 ...................................          206              8,692,646               6.57      
December 1, 2000 ...................................           66              2,910,505               2.20      
                                                            -----           ------------             ------      
  Total ............................................        3,269           $132,268,900             100.00%     
                                                            =====           ============             ======      

 Distribution of Periodic Cap - Group II Contracts

                                                        [Enlarge/Download Table]


                                                                                                 Percentage of  
                                                                                              Group II Contracts
                                                          Number of      Aggregate Principal    by Outstanding  
                                                          Contracts      Balance Outstanding   Principal Balance
Periodic Cap                                         As of Cut-off Date  As of Cut-off Date   As of Cut-off Date
------------                                         ------------------  ------------------   ------------------
                                                                                                                
No Cap ..............................................           2               $  90,936              0.07%    
1.000% ..............................................       1,355              54,808,376             41.44     
2.000 ...............................................       1,912              77,369,589             58.49     
                                                            -----            ------------            ------     
  Total .............................................       3,269            $132,268,900            100.00%    
                                                            =====            ============            ======     

 VANDERBILT MORTGAGE AND FINANCE, INC.

     The following  information  supplements  the  information in the Prospectus
under the heading  "Vanderbilt  Mortgage  and Finance,  Inc." and  "Underwriting
Policies" in the Prospectus.                                                    

     The volume of manufactured  housing contracts originated by the Company for
the periods  indicated  below and certain other  information  at the end of such
periods are as follows:                                                         

Contract Origination

                                                        [Enlarge/Download Table]


                                                              Year Ended June 30,                       Quarter Ended
                                         -----------------------------------------------------------    September 30,
                                           1994      1995       1996      1997      1998       1999         1999     
                                         --------  --------   --------  --------  --------   --------     --------   
                                                                                                                     
Principal Balance of Contracts                                                                                       
 Originated (in thousands) ............. $292,435  $345,260   $476,467  $646,624  $801,865  $1,085,484     $251,640  
Number of Contracts Originated .........   12,401    13,857     16,910    21,691    24,304      30,165        6,308  
Average Contract Size(1) ............... $ 23,582  $ 24,916   $ 28,177  $ 29,811  $ 32,993  $   35,985     $ 39,892  
Average Interest Rate(1) ...............   10.84%    12.24%     10.72%    11.10%    10.51%      10.40%       10.31%  

-------------                                                                   
(1)  As of period end.                                                          

     The following table shows the size of the portfolio of manufactured housing
contracts serviced by the Company on the dates indicated:                       

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Contract Servicing Portfolio

                                                        [Enlarge/Download Table]


                                                                                                         At       
                                                                                                      September   
                                                                         At June 30,                     30,      
                              ------------------------------------------------------------------------------------
                                        1994       1995     1996      1997     1998(2)   1999(2)       1999(2)    
                                      --------   -------- --------  -------- --------- ----------    ---------    
                                                                                                                  
Total Number of Contracts                                                                                         
Being Serviced(1) ...................   60,165    66,960    74,154   85,912   108,045   119,396      122,652      
Originated by the Company ...........   47,944    55,923    64,298   75,455    86,245    98,963      102,768      
Acquired from other institutions ....   12,221    11,037     9,856   10,457    21,800    20,433       19,884      

------------                                                                    
(1)  Excludes  contracts  serviced  by the  Company on behalf of the  Resolution
     Trust  Corporation  trust and other  trusts  previously  serviced  by First
Manufactured Housing Credit Corporation.                              

(2)  Includes Access Financial Contracts. On May 28, 1998, the Company purchased
     approximately  $245  million  of  manufactured  housing  installment  sales
     contracts (the "Access Financial  Contracts") from Access Financial Lending
Corp.                                                                 

 Delinquency Experience(1)

                                                        [Enlarge/Download Table]


                                                                                                                           At    
                                                                                                                       September 
                                                                                     At June 30,                           30,   
                                             ----------------------------------------------------------------------------------- 
                                             1994      1995      1996      1997    1998(8)  1998(9)   1999(8)   1999(9)  1999(9) 
                                             ----      ----      ----      ----    ------   ------    ------    ------   ------  
                                                                                                                                 
Total Number of Contracts                                                                                                        
Outstanding(2)(3) ......................... 60,165    66,960    74,154    85,912    99,819  108,045   112,399   119,396  122,652 
  Company Originations .................... 47,944    55,923    64,298    75,455    86,245   86,245    98,963    98,963  102,768 
  Acquisitions from other institutions .... 12,221    11,037     9,856    10,457    13,574   21,800    13,433    20,433   19,884 
Number of Contracts Delinquent(4):                                                                                               
  Total 30 to 59 days past due ............    772       819       953     1,159    1,287     2,045     1,140     1,274    1,864 
  Company Originations ....................    353       565       761       982    1,048     1,048     1,016     1,016    1,295 
  Acquisitions from other institutions ....    419       254       192       177      239       997       124       258      569 
Total 60 to 89 days past due ..............    209       227       285       284      326       568       379       453      511 
  Company Originations ....................    109       167       238       236      268       268       332       332      367 
  Acquisitions from other institutions ....    100        60        47        48       58       300        47       121      144 
Total 90 days or more past due ............    498       625       516       590      787     1,486       811     1,222    1,301 
  Company Originations ....................    203       315       341       440      547       547       610       610      734 
  Acquisitions from other institutions ....    295       310       175       150      240       939       201       612      567 
Total Contracts Delinquent(5) .............  1,479     1,671     1,754     2,033    2,400     4,099     2,330     2,949    3,676 
  Company Originations ....................    665     1,047     1,340     1,658    1,863     1,863     1,958     1,958    2,396 
  Acquisitions from other institutions ....    814       624       414       375      537     2,236       372       991    1,280 
Total Contracts Delinquent(6) .............  1,184     1,208     1,511     1,789    2,153     3,603     2,105     2,467    3,105 
  Company Originations ....................    556       873     1,211     1,503    1,711     1,711     1,825     1,825    2,189 
  Acquisitions from other institutions ....    628       335       300       286      442     1,892       280       642      916 
Total Delinquencies as a Percent(7) of                                                                                           
  Contracts Outstanding(5) ................   2.46%     2.50%     2.37%     2.37%    2.40%     3.79%     2.07%     2.47%    3.00%
  Company  Originations ...................   1.39%     1.87%     2.08%     2.20%    2.16%     2.16%     1.98%     1.98%    2.33%
  Acquisitions from other institutions        6.66%     5.65%     4.20%     3.59%    3.96%    10.26%     2.77%     4.85%    6.44%
Total Delinquencies as a Percent(7)                                                                                              
  of  Contracts  Outstanding(6) ...........   1.97%     1.80%     2.04%     2.08%    2.16%     3.34%     1.87%     2.07%    2.53%
Company  Originations .....................   1.16%     1.56%     1.88%     1.99%    1.98%     1.98%     1.84%     1.84%    2.13%
Acquisitions from other institutions ......   5.14%     3.04%     3.04%     2.74%    3.26%     8.68%     2.08%     3.14%    4.61%

---------------                                                                 
(1) Includes data on contracts originated by the Company and portfolios acquired
    by the  Company  from  other  financial  institutions,  as  described  under
"Vanderbilt Mortgage and Finance, Inc." in the Prospectus.              

(2) Excludes  contracts serviced by others for which the Company is contingently
liable.                                                                 

(3) Excludes contracts serviced by the Company on behalf of the Resolution Trust
    Corporation trust and other trusts previously serviced by First Manufactured
Housing Credit Corporation.                                             

(4) Including  contracts that were  repossessed  during the prior 30-day period,
    and based on number of days  payments are  contractually  past due (assuming
    30-day months).  Consequently,  a payment due on the first day of a month is
not 30 days delinquent until the first day of the following month.      

(5) Including  contracts that were  repossessed  during the prior 30-day period;
    figures  for  Acquisitions  from other  institutions  at June 30,  1995 also
include all such repossessed contracts on hand.                         

(6) Excluding contracts that were repossessed during the prior 30-day period.   

(7) By number of contracts.                                                     

(8) Excludes Access Financial Contracts.                                        

(9) Includes Access Financial Contracts.                                        

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      The following  table sets forth the loan  loss/repossession  experience of
the Company and its affiliates for the manufactured  housing contracts  serviced
by the Company.                                                                 
Loan Loss/Repossession Experience(1)

                                                        [Enlarge/Download Table]

                                                                                                                       At or for the
                                                                 At or for the Year Ended June 30,                     Quarter Ended
                                      -------------------------------------------------------------------------------- September 30,
                                      1994        1995        1996         1997        1998(9)       1999(9)   1999(10)    1999(10) 
                                      ----        ----        ----         ----        ------        ------    -------     -------  

                                                             (Dollars in thousands)                                                 
                                                                                                                                    
Total Number of Contracts                                                                                                           
  Serviced(2)(3) ..............      60,165      66,960      74,154       85,912       99,819       112,399     119,396     122,652 
  Company Originations ........      47,944      55,923      64,298       75,455       86,245        98,963      98,963     102,768 
  Acquisitions from other                                                                                                           
    institutions ..............      12,221      11,037       9,856       10,457       13,574        13,436      20,433      19,884 
Aggregate Principal Balance of                                                                                                      
  Contracts Serviced(4) .......  $1,006,794  $1,200,893  $1,456,103   $1,910,438   $2,340,583    $2,988,981  $3,204,787  $3,304,005 
  Company Originations ........  $  852,536  $1,074,302  $1,351,324   $1,749,645   $2,190,183    $2,787,204  $2,787,204  $2,902,445 
   Acquisitions from other                                                                                                          
    institutions ..............  $  154,258  $  126,591  $  104,779   $  160,793   $  150,400    $  201,777  $  417,583  $  401,560 
Net Losses from Contract                                                                                                            
  Liquidations(5):                                                                                                                  
  Total Dollars(6) ............  $    2,758  $    2,262  $    2,052   $      715   $   17,861    $   31,266  $   39,764  $   11,580 
  Company Originations(6) .....  $      528  $      362  $     (442)  $   (1,622)  $   15,099    $   24,671  $   24,671  $    8,285 
  Acquisitions from other                                                                                                           
    institutions ..............  $    2,230  $    1,900  $    2,494   $    2,337   $    2,762    $    6,595  $   15,093  $    3,295 
Percentage of Average Principal                                                                                                     
  Balance(7) ..................        0.30%       0.20%       0.15%        0.04%        0.84%         1.17%       1.37%       1.42%
  Company Originations ........        0.07%       0.04%      (0.04)%      (0.10)%       0.77%         0.99%       0.99%       1.16%
  Acquisitions from other                                                                                                           
    institutions ..............        1.62%       1.35%       2.16%        1.76%        1.70%         3.75%       3.68%       3.22%
Total Number of Contracts in                                                                                                        
  Repossession(3) .............         565         540         709          937        1,682(10)     1,514       1,857       1,977 
  Company Originations(8) .....         388         422         635          885        1,229         1,374       1,374       1,567 
  Acquisitions from Other                                                                                                           
    Institutions ..............         177         118          74           52          453           140         483         410 

------------------                                                              
(1)  Includes  data  on  contracts  originated  by the  Company  and  portfolios
     acquired by the Company  from other  financial  institutions,  as described
under "Vanderbilt Mortgage and Finance, Inc." in the Prospectus.      

(2)  As of period  end.  Excludes  contracts  serviced  by others  for which the
Company is contingently liable.                                       

(3)  Excludes  contracts  serviced  by the  Company  on  behalf of  Access,  the
     Resolution  Trust  Corporation  and  trusts  previously  serviced  by First
Manufactured Housing Credit Corporation.                              

(4)  As of period end.  Includes  principal  balances of  contracts  serviced by
others for which the Company is contingently liable.                  

(5)  Includes net losses on  contracts  serviced by others for which the Company
is contingently liable.                                               

(6)  For all periods  through June 30, 1997,  the  calculation of net losses has
     been  determined  after all accrued and unpaid interest was written off and
     does not include  repossession and other  liquidation  expenses.  For these
     periods,  data with respect to repossession and other liquidation  expenses
     generally was not maintained by dealers on a separately identifiable basis,
     and,  therefore,  this  information  was not available to the Company.  The
     Company  believes  that it would not be unusual  for such  expenses to have
     been  equal  to 15% of  the  Scheduled  Principal  Balance  of a  defaulted
     Contract.  However,  actual expenses may have been higher or lower. For the
     periods ended June 30, 1998,  June 30, 1999 and  September  30, 1999,  data
     with  respect  to  repossession  and other  liquidation  expenses  has been
     maintained by dealers and made  available to the Company.  The Company has,
     therefore, included dealer repossession and liquidation expense data in the
     numbers calculated for such periods. Because of the different computational
     method used,  amounts shown for the periods  ended June 30, 1998,  June 30,
1999 and September 30, 1999 are not comparable to prior periods.      

(7)  As a percentage of the average  principal  balance of all  contracts  being
serviced during the period. Percentages have been annualized.         

(8)  Includes  repossessions  from  contracts  serviced  by others for which the
Company is contingently liable.                                       

(9)  Excludes Access Financial Contracts.                                       

(10) Includes Access Financial Contracts.                                       

      The  Company  believes  that  its  historical  loss  experience  has  been
favorably  affected by its capacity to resell  repossessed units through dealers
owned  by CHI and to make  needed  repairs  on  repossessed  units  through  the
facilities of such dealers, rather than paying the rates charged by unaffiliated
parties. If the Company is replaced as Servicer of the Contracts,  the successor
Servicer may not have access to the CHI dealer  network  and, as a  consequence,
the loss experience on the Contracts may be adversely affected.                 

      The data presented in the preceding tables are for  illustrative  purposes
only, and there is no assurance that the delinquency, loan loss and repossession
experience  of Contracts in the Contract  Pool will be similar to that set forth
above.  The delinquency,  loan loss and repossession  experience of manufactured
housing  contracts  historically  has been  sharply  affected  by a downturn  in
regional or local economic conditions.  For instance, such a downturn and higher
levels of  delinquency,  loan loss and  repossession  were  experienced in areas
dependent  on the  oil  and gas  industry.  These  regional  or  local  economic
conditions are often volatile,  and no predictions can be made regarding  future
economic loss upon repossession.  In addition, an increased supply of used units
in one region may in turn  affect the supply in other  regions,  thus  affecting
economic loss upon liquidation in such other regions.  Information regarding the
geographic  location,  at origination,  of the  Manufactured  Homes securing the
Contracts in the Contract Pool is set forth under "The Contract Pool" herein.   

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RATIO OF EARNINGS TO FIXED CHARGES FOR CHI

      Set forth below are CHI's ratios of earnings to fixed charges for the past
five years and the three months ended  September  30, 1999.  For the purposes of
compiling  these ratios,  earnings  consist of earnings before income taxes plus
fixed  charges.  Fixed  charges  consist of interest  expense  and the  interest
portion of rent expense.                                                        

                                                        [Enlarge/Download Table]


                                                                                                 For Three Month
                                                                                                  Period Ended  
                                                            For Year Ended June 30,              September 30,  
                                                -----------------------------------------------  ---------------
                                                 1995      1996      1997       1998      1999        1999      
                                                 ----      ----      ----       ----      ----        ----      
                                                                                                                
Ratio of Earnings to Fixed Charges ............. 21.64     36.00     39.99     41.24      12.48*      28.10     

----------------                                                                
 * The  reduction in the earnings to fixed charges ratio for the year ended June
   30, 1999 compared to prior years was due primarily to an increase in interest
   expense  as a result  of  increased  borrowings  by CHI and its  consolidated
   companies.  The requisite financing for recent acquisitions of contracts, the
   funding of a CHI stock  repurchase  program and general working capital needs
   attributed to such rise in CHI's outstanding debt obligations. For additional
   financial  information  we refer you to CHI's  annual  10-K report for fiscal
   year ended June 30, 1999 and quarterly  10-Q report for the quarterly  period
ended September 30, 1999, which were previously filed with the SEC.       

 YIELD AND PREPAYMENT CONSIDERATIONS

      The  Contracts  have  maturities  at  origination  ranging  from 36 to 361
months,  but may be  prepaid  in full or in  part at any  time.  The  prepayment
experience  of the  Contracts  (including  prepayments  due to  liquidations  of
defaulted  contracts)  will affect the  average  life of the  Certificates.  The
weighted  average  life of, and, if  purchased  at other than par,  the yield to
maturity  on, the  Offered  Certificates  will  relate to the rate of payment of
principal in the Contracts in the related  Contract Group,  including,  for this
purpose,   prepayments,   liquidations   due   to   defaults,   casualties   and
condemnations.   Based  on  the  Company's  experience  with  the  portfolio  of
conventional   manufactured  housing  contracts  serviced  by  it,  the  Company
anticipates  that a number of  Contracts  will be prepaid in full prior to their
maturity.  A number  of  factors,  including  homeowner  mobility,  general  and
regional  economic  conditions  and  prevailing  interest  rates  may  influence
prepayments.  In  addition,  repurchases  of  Contracts  on  account  of certain
breaches  of   representations   and   warranties   as  described   below  under
"Descriptions of the Certificates--Conveyance of Contracts" will have the effect
of  prepayment  of such  Contracts  and  therefore  will  affect the life of the
Certificates.  Most of the Contracts contain  provisions that prohibit the owner
from selling the  Manufactured  Home without the prior  consent of the holder of
the related Contract.  Such provisions are similar to the "due-on-sale"  clauses
and may not be  enforceable  in some states.  See "Certain  Legal Aspects of the
Contracts--Transfers  of Manufactured  Homes;  Enforceability  of  `Due-on-Sale'
Clauses"  in the  Prospectus.  The initial  Servicer's  policy is to permit most
sales  of  Manufactured  Homes  where  the  proposed  buyer  meets  the  initial
Servicer's  then current  underwriting  standards  and enters into an assumption
agreement.  See "--Weighted Average Life of the Offered  Certificates" below and
"Maturity and Prepayment Considerations" in the Prospectus.                     

      As with fixed rate obligations generally, the rate of prepayment on a pool
of  Contracts  with fixed rates (such as the Group I  Contracts)  is affected by
prevailing  market rates for Contracts of a comparable term and risk level. When
the  market  interest  rate is below  the  contract  APR,  Obligors  may have an
increased incentive to refinance their contracts. Depending on prevailing market
rates,  the future outlook for market rates and economic  conditions  generally,
some  Obligors may sell or refinance  their  contracts in order to realize their
equity in the  manufactured  house,  to meet cash  flow  needs or to make  other
investments.                                                                    

      As is the case with conventional  fixed rate obligations,  adjustable rate
obligations  (such as the Group II  Contracts)  may also be subject to a greater
rate of principal  prepayments  in a declining  interest rate  environment.  For
example,  if  prevailing  interest  rates fall  significantly,  adjustable  rate
contracts  could be  subject  to  higher  prepayment  rates  than if  prevailing
interest rates remain constant because the availability of fixed-rate  contracts
at  competitive  interest  rates  may  encourage  Obligors  to  refinance  their
adjustable rate contract to "lock in" a lower fixed interest rate.  However,  no
assurance  can be  given  as to the  level  of  prepayments  that  the  Group II
Contracts will experience.                                                      

      The allocation of  distributions to the  Certificateholders  in accordance
with the Agreement will have the effect of accelerating  the amortization of the
Senior  Certificates  in  the  sequence  indicated  under  "Description  of  the
Certificates--Distributions"  from the amortization  that would be applicable if
distributions in respect of the applicable Formula Principal Distribution Amount
were made pro rata according to the respective  Principal Balances              

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of  each  Class  of  Certificates.   As  described  under  "Description  of  the
Certificates--Group  I Certificates  and the  Senior/Subordinate  Structure" and
"--Group II Certificates and the  Senior/Subordinate  Structure"  herein, to the
extent  that,  on any  Remittance  Date,  the  Group  I or  Group  II  Available
Distribution  Amount,  as  applicable,  is  not  sufficient  to  permit  a  full
distribution  of the applicable  Formula  Principal  Distribution  Amount or the
portion  thereof  due on  such  Remittance  Date  to the  Class  of the  Offered
Certificates  entitled  to such  distribution,  the effect  will be to delay the
amortization  of such Class of the Offered  Certificates.  If a  purchaser  of a
Class of Offered  Certificates  purchases  them at a discount and calculates its
anticipated  yield to maturity  based on an assumed rate of payment of principal
on such Offered  Certificates  that is faster than the rate  actually  realized,
such  purchaser's  actual  yield to  maturity  will be lower  than the  yield so
calculated by such purchaser.                                                   

      In addition to the foregoing  factors  affecting the weighted average life
of the Senior Certificates,  the  overcollateralization  provisions of the Trust
result in a limited  acceleration of the Group II  Certificates  relative to the
amortization of the Group II Contracts in early months of the  transaction.  The
accelerated  amortization  is  achieved  by the  application  of certain  excess
interest  to the payment of the Group II  Certificate  Principal  Balance.  This
acceleration feature creates overcollateralization which results from the excess
of the  Group II  Contract  Balance  over the  Group  II  Certificate  Principal
Balance.  Once the  required  level of  overcollateralization  is  reached,  the
acceleration feature will cease, unless necessary to maintain the required level
of overcollateralization.                                                       

      The effective yield to each holder of a Group I Certificate  (other than a
Class I A-1 Certificate) will be below that otherwise produced by the applicable
Remittance  Rate and the purchase  price of such holder's  Certificate  because,
while interest will accrue in respect of each calendar month,  the  distribution
of such interest to such holders will be made on the 7th day (or, if such day is
not a business day, the next succeeding business day) of the month following the
Due Period in which it accrues.                                                 

      The rate of distributions of principal of the Offered Certificates and the
yield to maturity of the Offered  Certificates  also will be directly related to
the rate of payment of principal (including  prepayments) of the Contracts.  The
rate of principal  distributions on the Offered Certificates will be affected by
the amortization  schedules of the Contracts and the rate of principal  payments
on the Contracts  (including  prepayments due to liquidations upon default).  In
general,  the  Contracts  may be prepaid  by the  Obligors  at any time  without
payment of any prepayment fee or penalty.                                       

      The Class I M-1  Certificateholders  will not receive any distributions of
principal until the Class I M-1 and Class I B Principal Distribution Test is met
or the Class I A  Principal  Balance is reduced to zero.  The rate of  principal
payments on the Class I M-1 Certificates,  the aggregate amount of distributions
on the Class I M-1  Certificates  and the yield to  maturity  of the Class I M-1
Certificates  will be  affected  by the rate of Obligor  defaults  resulting  in
losses on  Liquidated  Contracts,  by the  severity  of those  losses and by the
timing of those losses.  If a purchaser of Class I M-1  Certificates  calculates
its anticipated  yield based on an assumed rate of default and an assumed amount
of losses  that are lower than the  default  rate and amount of losses  actually
incurred and such amount of losses actually  incurred is not entirely covered by
the  subordination  of the Class I B Certificates,  its actual yield to maturity
will be lower  than that so  calculated.  The  timing  of  losses on  Liquidated
Contracts will also affect an investor's  actual yield to maturity,  even if the
rate of  defaults  and  severity  of losses are  consistent  with an  investor's
expectations.  If the protection afforded to the Class I M-1  Certificateholders
by the subordination of the Class I B Certificates is exhausted, the Class I M-1
Certificateholders  will bear all losses and  delinquencies on the Contracts and
will incur a loss on their investment.                                          

      The Class I B-1  Certificateholders  will not receive any distributions of
principal until the Class I M-1 and Class I B Principal Distribution Test is met
or the Class I A  Principal  Balance  and the Class I M-1  Principal  Balance is
reduced to zero. The rate of principal payments on the Class I B-1 Certificates,
the aggregate  amount of  distributions  on the Class I B-1 Certificates and the
yield to maturity of the Class I B-1  Certificates  will be affected by the rate
of Obligor defaults resulting in losses on Liquidated Contracts, by the severity
of those losses and by the timing of those losses. If a purchaser of Class I B-1
Certificates  calculates  its  anticipated  yield  based on an  assumed  rate of
default and an assumed amount of losses that are lower than the default rate and
amount of losses actually  incurred and such amount of losses actually  incurred
is not entirely covered by the  subordination  of the Class I B-2  Certificates,
its actual yield to maturity will be lower than that so  calculated.  The timing
of losses on Liquidated Contracts will also affect an investor's actual yield to
maturity,  even if the rate of defaults  and  severity of losses are  consistent
with an investor's  expectations.  If the protection afforded to the Class I B-1
Certificateholders  by the  subordination  of the  Class I B-2  Certificates  is
exhausted,  the  Class  I  B-1  Certificateholders  will  bear  all  losses  and
delinquencies on the Contracts and will incur a loss on their investment.       

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      The Class II B  Certificateholders  will not receive any  distributions of
principal until the Class II B Principal  Distribution  Test is met or the Class
II A-1  Principal  Balance  is reduced  to zero.  Once the Class II B  Principal
Distribution Test is met,  however,  there is a likelihood that the Class II A-1
Certificates  will not receive  distributions of principal for a period of time.
The rate of principal  payments on the Class II B-1 Certificates,  the aggregate
amount  of  distributions  on the  Class II B-1  Certificates  and the  yield to
maturity  of the  Class  II B-1  Certificates  will be  affected  by the rate of
Obligor defaults resulting in losses on Liquidated Contracts, by the severity of
those losses and by the timing of those  losses.  If a purchaser of Class II B-1
Certificates  calculates  its  anticipated  yield  based on an  assumed  rate of
default and an assumed amount of losses that are lower than the default rate and
amount of losses actually  incurred and such amount of losses actually  incurred
is not entirely covered by the  subordination of the Class II B-2  Certificates,
the Class II B-3  Certificates  and the Class II B-4  Certificates,  its  actual
yield to maturity will be lower than that so calculated. The timing of losses on
Liquidated  Contracts  will also affect an investor's  actual yield to maturity,
even if the rate of  defaults  and  severity  of losses are  consistent  with an
investor's  expectations.  If  the  protection  afforded  to  the  Class  II B-1
Certificateholders  by the subordination of the Class II B-2  Certificates,  the
Class II B-3 Certificates  and the Class II B-4  Certificates is exhausted,  the
Class II B-1  Certificateholders  will bear all losses and  delinquencies on the
Contracts  and will  incur a loss on  their  investment.  The rate of  principal
payments on the Class II B-2 Certificates, the aggregate amount of distributions
on the Class II B-2  Certificates  and the yield to maturity of the Class II B-2
Certificates  will be  affected  by the rate of Obligor  defaults  resulting  in
losses on  Liquidated  Contracts,  by the  severity  of those  losses and by the
timing of those losses.  If a purchaser of Class II B-2 Certificates  calculates
its anticipated  yield based on an assumed rate of default and an assumed amount
of losses  that are lower than the  default  rate and amount of losses  actually
incurred and such amount of losses actually  incurred is not entirely covered by
the  subordination  of the  Class  II B-3  Certificates  and  the  Class  II B-4
Certificates,  its  actual  yield  to  maturity  will  be  lower  than  that  so
calculated.  The timing of losses on  Liquidated  Contracts  will also affect an
investor's  actual yield to maturity,  even if the rate of defaults and severity
of losses are  consistent  with an investor's  expectations.  If the  protection
afforded  to the Class II B-2  Certificateholders  by the  subordination  of the
Class II B-3 Certificates  and the Class II B-4  Certificates is exhausted,  the
Class II B-2  Certificateholders  will bear all losses and  delinquencies on the
Contracts  and will  incur a loss on  their  investment.  The rate of  principal
payments on the Class II B-3 Certificates, the aggregate amount of distributions
on the Class II B-3  Certificates  and the yield to maturity of the Class II B-3
Certificates  will be  affected  by the rate of Obligor  defaults  resulting  in
losses on  Liquidated  Contracts,  by the  severity  of those  losses and by the
timing of those losses.  If a purchaser of Class II B-3 Certificates  calculates
its anticipated  yield based on an assumed rate of default and an assumed amount
of losses  that are lower than the  default  rate and amount of losses  actually
incurred and such amount of losses actually  incurred is not entirely covered by
the subordination of the Class II B-4 Certificates, its actual yield to maturity
will be lower  than that so  calculated.  The  timing  of  losses on  Liquidated
Contracts will also affect an investor's  actual yield to maturity,  even if the
rate of  defaults  and  severity  of losses are  consistent  with an  investor's
expectations.  If the protection afforded to the Class II B-3 Certificateholders
by the subordination of the Class II B-4 Certificates is exhausted, the Class II
B-3  Certificateholders  will bear all losses and delinquencies on the Contracts
and will incur a loss on their  investment.  There can be no assurance  that the
delinquency  or  repossession  experience  set forth  herein  under  "Vanderbilt
Mortgage and Finance,  Inc." will be  representative  of the results that may be
experienced  with respect to the Contracts.  There can be no assurance as to the
delinquency, repossession or loss experience with respect to the Contracts.     

      As described  herein under the "Description of the  Certificates--Group  I
Certificates and the  Senior/Subordinate  Structure" and "--Losses on Liquidated
Contracts" on any Remittance  Date on or after the  Remittance  Date, if any, on
which the Class I A Principal Balance is greater than the related Pool Scheduled
Principal  Balance,  if the Available  Distribution  Amount is not sufficient to
permit a full distribution of the Formula Principal  Distribution  Amount to the
Class of Class I A Certificateholders  then entitled to such amount, the Class I
A-5 Certificateholders will absorb (i) all losses on each Liquidated Contract in
the amount by which its  Liquidation  Proceeds (net of Liquidation  Expenses and
applicable Advances) are less than its unpaid principal balance plus accrued and
unpaid  interest  thereon  at the  weighted  average  Remittance  Rate  and  the
percentage  rate used to  calculate  the  monthly  servicing  fee and (ii) other
shortfalls in the Available  Distribution  Amount and will incur a loss on their
investments. See "Description of the Certificates--Distributions" herein.       

      On any Remittance  Date on or after the Remittance  Date, if any, on which
the  Principal  Balance  of the Senior  Certificates  of a  particular  Group is
greater than the Pool Scheduled Principal Balance for such Group, if the related
Available Distribution Amount is not sufficient to permit a full distribution of
the   related   Formula   Principal   Distribution   Amount   to   such   Senior
Certificateholders, such Senior Certificateholders will absorb (i) all losses on

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each  Liquidated  Contract in such Group in the amount by which its  Liquidation
Proceeds (net of Liquidation Expenses and applicable Advances) are less than its
unpaid  principal  balance  plus  accrued  and  unpaid  interest  thereon at the
weighted  average  Remittance Rate and the percentage rate used to calculate the
monthly  servicing  fee and  (ii)  other  shortfalls  in the  related  Available
Distribution Amount and will incur a loss on their investments. See "Description
of the Certificates--Distributions" herein.                                     

      The Company (if it is no longer the Servicer) and the Servicer (whether or
not the Company  remains the  Servicer)  each has the option to  repurchase  the
Contracts then outstanding and any other property constituting the Trust Fund if
on any Remittance Date the Pool Scheduled  Principal Balance is less than 10% of
the   Cut-off   Date  Pool   Principal   Balance.   See   "Description   of  the
Certificates--Optional  Termination"  herein.  The exercise of such option would
effect the early retirement of the then outstanding Certificates.               

      In the event that there were a sufficiently  large number of delinquencies
on the Contracts in any Due Period that were not covered by Monthly  Advances as
described herein, the amounts paid to Certificateholders  could be less than the
amount of principal and interest that would  otherwise be payable on the Offered
Certificates  with respect to such Due Period. In such event, even if delinquent
payments on the Contracts were eventually recovered upon liquidation,  since the
amounts received would not include interest on delinquent interest payments, the
effective  yield  on  the  Contracts   would  be  reduced,   and  under  certain
circumstances it is possible that sufficient  amounts might not be available for
the ultimate payment of all principal of the Offered  Certificates  plus accrued
interest  thereon  at the  related  Remittance  Rate,  thus  also  reducing  the
effective yield on the Offered Certificates.                                    

      While partial prepayments of the principal on the Contracts are applied on
Due Dates,  Obligors are not required to pay interest on the Contracts after the
date of a full prepayment of principal. As a result, full prepayments in advance
of the  related Due Dates for such  Contracts  in any Due Period will reduce the
amount of interest  received from  Obligors  during such Due Period to less than
one month's interest. On the other hand, when a Contract (other than a Bi-weekly
Contract or any Semi-Monthly Contract) is prepaid in full during any period, but
after the Due Date for such  Contract in such Due Period,  the effect will be to
increase the amount of interest  received from the related  Obligor  during such
Due  Period  to more  than one  month's  interest.  If a  sufficient  number  of
Contracts  are  prepaid  in full in a given  Due  Period  in  advance  of  their
respective Due Dates,  interest  payable on all of the Contracts during that Due
Period  may be  less  than  the  interest  payable  on the  related  Classes  of
Certificates with respect to such Due Period. In addition, because the principal
balance of the  Bi-weekly  Contracts  are reduced on a  bi-weekly  basis and the
principal  balance of any  Semi-Monthly  Contracts on a semi-monthly  basis, the
amount of interest due from  Obligors on such  Contracts is less than that which
would have accrued if such Contracts  were  amortized on a monthly  basis.  As a
result,  the Trust Fund may not receive sufficient monies to pay the interest on
such  Certificates  in the amounts set forth  herein under  "Description  of the
Certificates--Distributions"  and to  make a full  distribution  to the  related
Certificateholders  of  the  related  Formula  Principal   Distribution  Amounts
respectively  allocable  to them.  Although  no  assurance  can be given in this
matter,  the Company  does not  anticipate  that the net  shortfall  of interest
received  because of  prepayments in full or the  amortization  of the Bi-weekly
Contracts or any Semi-Monthly Contracts in any Due Period would be great enough,
in the absence of delinquencies  and Liquidation  Losses,  to reduce the related
Available Distribution Amount for a Remittance Date below the amount required to
be distributed to the related  Certificateholders on that Remittance Date in the
absence of such prepayment interest shortfalls.                                 

      Each  scheduled  payment on a  Bi-weekly  Contract  in any Due Period will
contain  only  two  weeks  of  interest,  and  each  scheduled  payment  on  any
Semi-Monthly  Contract  in any Due Period  will  contain  only  one-half  of one
month's interest rather than one month's interest. In addition,  the second, and
in some Due Periods the third (in the case of a  Bi-weekly  Contract)  scheduled
payment in each Due Period will be  calculated  on a principal  balance  that is
lower than the  principal  balance at the  beginning  of that Due Period.  These
characteristics  may result in the interest  due on a Bi-weekly  Contract or any
Semi-Monthly  Contract in a  particular  Due Period being less than thirty days'
interest on the principal balance thereof at the beginning of the Due Period.   

Weighted Average Life of the Offered Certificates                               

      The  following  information  is given solely to  illustrate  the effect of
prepayments  of the  Contracts  on the  weighted  average  life  of the  Offered
Certificates  under  the  stated  assumptions  and  is not a  prediction  of the
prepayment rate that might actually be experienced by the Contracts.            

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      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 the Offered Certificates
will be  affected  by the  rate at which  principal  on the  Contracts  is paid.
Principal payments on Contracts may be in the form of scheduled  amortization or
prepayments (for this purpose,  the term  "prepayment"  includes  repayments and
liquidations due to default or other dispositions of Contracts).  Prepayments on
contracts may be measured by a prepayment  standard or model.  The model used in
this Prospectus  Supplement  ("Prepayment Model") is based on an assumed rate of
prepayment  each  month of the then  unpaid  principal  balance of a pool of new
Contracts.  100% of the Prepayment  Model assumes  prepayment  rates of 3.7% per
annum of the then unpaid principal  balance of such Contracts in the first month
of the life of the  Contracts  and an  additional  0.1% per annum in each  month
thereafter  until the 24th month.  Beginning in the 24th month and in each month
thereafter  during  the  life of the  Contracts,  100% of the  Prepayment  Model
assumes a constant prepayment rate of 6.0% per annum.                           

      As used in the following  tables "0% of the  Prepayment  Model" assumes no
prepayments  on the  Contracts;  "100%  of the  Prepayment  Model"  assumes  the
Contracts  will prepay at rates equal to 100% of the  Prepayment  Model  assumed
prepayment  rates; and "225% of the Prepayment Model" assumes the Contracts will
prepay at rates equal to 225% of the Prepayment Model assumed prepayment rates. 

      There is no assurance,  however,  that  prepayments  of the Contracts will
conform to any level of the Prepayment Model, and no representation is made that
the Contracts will prepay at the prepayment  rates shown or any other prepayment
rate. The rate of principal payments on pools of manufactured  housing contracts
is influenced by a variety of economic,  geographic,  social and other  factors,
including  the  level of  interest  rates  and the  rate at  which  manufactured
homeowners sell their  manufactured  homes or default on their contracts.  Other
factors  affecting  prepayment of contracts include changes in obligors' housing
needs, job transfers,  unemployment and obligors' net equity in the manufactured
homes. In the case of mortgage loans secured by site-built homes, in general, if
prevailing  interest rates fall  significantly  below the interest rates on such
mortgage loans, the mortgage loans are likely to be subject to higher prepayment
rates than if  prevailing  interest  rates remain at or above the rates borne by
such mortgage  loans.  Conversely,  if prevailing  interest rates rise above the
interest on such mortgage  loans,  the rate of  prepayment  would be expected to
decrease.  In the case of manufactured housing contracts,  however,  because the
outstanding  principal balances are, in general, much smaller than mortgage loan
balances  and the original  term to maturity of each such  contract is generally
shorter,  the  reduction  or  increase  in the size of the  monthly  payments on
contracts of the same  maturity and principal  balance  arising from a change in
the interest rate thereon is generally  much smaller.  Consequently,  changes in
prevailing  interest rates may not have a similar effect,  or may have a similar
effect, but to a smaller degree, on the prepayment rates on manufactured housing
contracts.                                                                      

Group I Assumptions                                                             

      The tables set forth below assume that there are no  delinquencies  on the
Group I  Contracts  and  that  there  will  be a  sufficient  Group I  Available
Distribution  Amount to distribute  interest on the Group I Certificates and the
Group I Formula Principal  Distribution  Amount to the  Certificateholders  then
entitled thereto.                                                               

      The  percentages and weighted  average lives in the following  tables were
determined  assuming that (i) scheduled  interest and principal  payments on the
Group I Contracts  are received in a timely manner and  prepayments  are made at
the indicated  percentages of the Prepayment Model set forth in the tables; (ii)
the  Servicer  or the  Company  exercises  its  right  of  optional  termination
described  above;  (iii) the Group I Contracts  will, as of the Cut-off Date, be
grouped into nine pools having the  additional  characteristics  set forth below
under "Assumed  Contract  Characteristics  for Group I"; (iv) one-month Libor is
5.4588%;  (v) the Original Class  Principal  Balance and the Remittance  Rate of
each Class of Group I Certificates is as set forth under "Summary  Information";
(vi) no interest  shortfalls will arise in connection with prepayment in full of
the  Contracts;  (vii) there will be no losses on the Group I Contracts;  (viii)
the Group I Performance Tests are satisfied;  (ix) the Group II Contracts prepay
at 250% of the  Prepayment  Model except in the case of the 0% of the Prepayment
Model  scenario in which the Group II Contracts  prepay at 0% of the  Prepayment
Model;  and (x) the Group I Certificates  are purchased on November 30, 1999. No
representation  is made that the  Contracts  will  experience  delinquencies  or
losses at the respective rates assumed above or at any other rates.             

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Assumed Contract Characteristics for Group I

                                                        [Enlarge/Download Table]


                                                                              Remaining    Original  
                                                                               Term to      Term to  
                                                 Current                      Maturity     Maturity  
                   Pool                     Principal Balance       APR       (Months)     (Months)  
 -----------------------------------------  ----------------   ------------  -----------  -----------
                                                                                                     
1 ........................................   $ 4,881,265.68      11.5170%        72            73    
2 ........................................    10,533,381.48      10.8940        114           115    
3 ........................................    13,579,546.95      10.8720        145           146    
4 ........................................    18,864,455.17      11.0990        177           179    
5 ........................................    14,657,976.67      10.4450        206           207    
6 ........................................    31,259,952.35      11.0000        238           239    
7 ........................................    13,166,919.60       9.5150        260           261    
8 ........................................    11,525,086.40      10.0710        297           300    
9 ........................................    36,450,642.54       9.6810        350           356    
                                            ---------------                                          
   Total .................................  $154,919,226.84                                          
                                            ===============                                          

      Since the tables  were  prepared  on the basis of the  assumptions  in the
preceding paragraph,  there may be discrepancies  between the characteristics of
the actual Group I Contracts  and the  characteristics  of the Group I Contracts
assumed in preparing the tables.  Any such  discrepancy  may have an effect upon
the percentages of the Original Class I A-1 Principal Balance,  Original Class I
A-2 Principal Balance,  Original Class I A-3 Principal Balance, Original Class I
A-4 Principal Balance,  Original Class IA-5 Principal Balance,  Original Class I
M-1 Principal Balance, Original Class I B-1 Principal Balance and Original Class
I B-2 Principal  Balance  outstanding and weighted  average lives of the Class I
A-1 Certificates,  Class I A-2 Certificates,  Class I A-3 Certificates,  Class I
A-4 Certificates,  Class I A-5 Certificates,  Class I M-1 Certificates,  Class I
B-1  Certificates  and  Class I B-2  Certificates  set forth in the  tables.  In
addition,  since the actual  Contracts  and the Trust Fund have  characteristics
which  differ from those  assumed in preparing  the tables set forth below,  the
distributions  of  principal on each Class of Group I  Certificates  may be made
earlier or later than as indicated in the tables.                               

      It is not likely that Contracts will prepay at any constant  percentage of
the  Prepayment  Model to maturity or that all Contracts will prepay at the same
rate.  In addition,  the diverse  remaining  terms to maturity of the  Contracts
(which include recently originated Contracts) could produce slower distributions
of principal  than as indicated in the tables at the various  percentages of the
Prepayment  Model  specified  even if the  weighted  average  remaining  term to
maturity of the Contracts is the same as the weighted average  remaining term to
maturity of the Assumed Contract Characteristics.                               

      Investors  are urged to make their  investment  decisions  on a basis that
includes their determination as to anticipated  prepayment rates under a variety
of the assumptions discussed herein.                                            

      Based on the  foregoing  assumptions,  the following  tables  indicate the
resulting  weighted  average  lives  of  the  Certificates  and  set  forth  the
percentage of the Original Class  Principal  Balance of each Group I Certificate
that  would be  outstanding  after  each of the  dates  shown  at the  indicated
percentages of the Prepayment Model.                                            

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Percent of the Original Principal Balance of the Class I A-1
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                         Prepayments (% of Prepayment Model)             
                                          ---------------------------------------------------------------
                                           0%        175%        200%        225%       275%        300% 
                                          ----       -----       -----       -----      -----       -----
                                                                                                         
Initial Percentage ......................  100        100         100         100         100        100 
November 7, 2000 ........................   91         64          60          56          48         44 
November 7, 2001 ........................   82         24          16           8           0          0 
November 7, 2002 ........................   71          0           0           0           0          0 
November 7, 2003 ........................   59          0           0           0           0          0 
November 7, 2004 ........................   46          0           0           0           0          0 
November 7, 2005 ........................   31          0           0           0           0          0 
November 7, 2006 ........................   17          0           0           0           0          0 
November 7, 2007 ........................    2          0           0           0           0          0 
November 7, 2008 ........................    0          0           0           0           0          0 
November 7, 2009 ........................    0          0           0           0           0          0 
November 7, 2010 ........................    0          0           0           0           0          0 
November 7, 2011 ........................    0          0           0           0           0          0 
November 7, 2012 ........................    0          0           0           0           0          0 
November 7, 2013 ........................    0          0           0           0           0          0 
November 7, 2014 ........................    0          0           0           0           0          0 
November 7, 2015 ........................    0          0           0           0           0          0 
November 7, 2016 ........................    0          0           0           0           0          0 
November 7, 2017 ........................    0          0           0           0           0          0 
November 7, 2018 ........................    0          0           0           0           0          0 
November 7, 2019 ........................    0          0           0           0           0          0 
November 7, 2020 ........................    0          0           0           0           0          0 
November 7, 2021 ........................    0          0           0           0           0          0 
November 7, 2022 ........................    0          0           0           0           0          0 
November 7, 2023 ........................    0          0           0           0           0          0 
November 7, 2024 ........................    0          0           0           0           0          0 
November 7, 2025 ........................    0          0           0           0           0          0 
November 7, 2026 ........................    0          0           0           0           0          0 
November 7, 2027 ........................    0          0           0           0           0          0 
November 7, 2028 ........................    0          0           0           0           0          0 
November 7, 2029 ........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ........  4.5        1.3         1.2         1.1         0.9        0.9 

------------                                                          
(1)  The weighted  average life of the Class I A-1 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I A-1  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I A-1 Principal Balance.                

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Percent of the Original Principal Balance of the Class I A-2
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        225%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100          90         80 
November 7, 2002 .........................  100         80          65          51          23         10 
November 7, 2003 .........................  100         34          16           0           0          0 
November 7, 2004 .........................  100          0           0           0           0          0 
November 7, 2005 .........................  100          0           0           0           0          0 
November 7, 2006 .........................  100          0           0           0           0          0 
November 7, 2007 .........................  100          0           0           0           0          0 
November 7, 2008 .........................   79          0           0           0           0          0 
November 7, 2009 .........................   56          0           0           0           0          0 
November 7, 2010 .........................   33          0           0           0           0          0 
November 7, 2011 .........................   12          0           0           0           0          0 
November 7, 2012 .........................    0          0           0           0           0          0 
November 7, 2013 .........................    0          0           0           0           0          0 
November 7, 2014 .........................    0          0           0           0           0          0 
November 7, 2015 .........................    0          0           0           0           0          0 
November 7, 2016 .........................    0          0           0           0           0          0 
November 7, 2017 .........................    0          0           0           0           0          0 
November 7, 2018 .........................    0          0           0           0           0          0 
November 7, 2019 .........................    0          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 10.3        3.6         3.3         3.0         2.6        2.4 

-------------                                                         
(1)  The weighted  average life of the Class I A-2 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I A-2  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I A-2 Principal Balance.                

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Percent of the Original Principal Balance of the Class I A-3
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        225%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100          99          61         44 
November 7, 2004 .........................  100         90          67          46           7          0 
November 7, 2005 .........................  100         58          36          16           0          0 
November 7, 2006 .........................  100         31          10           0           0          0 
November 7, 2007 .........................  100          7           0           0           0          0 
November 7, 2008 .........................  100          0           0           0           0          0 
November 7, 2009 .........................  100          0           0           0           0          0 
November 7, 2010 .........................  100          0           0           0           0          0 
November 7, 2011 .........................  100          0           0           0           0          0 
November 7, 2012 .........................   95          0           0           0           0          0 
November 7, 2013 .........................   74          0           0           0           0          0 
November 7, 2014 .........................   52          0           0           0           0          0 
November 7, 2015 .........................   35          0           0           0           0          0 
November 7, 2016 .........................   15          0           0           0           0          0 
November 7, 2017 .........................    0          0           0           0           0          0 
November 7, 2018 .........................    0          0           0           0           0          0 
November 7, 2019 .........................    0          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 15.2        6.3         5.6         5.0         4.2        3.9 

------------                                                          
(1)  The weighted  average life of the Class I A-3 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I A-3  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I A-3 Principal Balance.                

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Percent of the Original Principal Balance of the Class I A-4
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]

                                                           Prepayments (% of Prepayment Model)             
                                            ---------------------------------------------------------------
                                             0%        175%        200%        225%       275%        300% 
                                            ----       -----       -----       -----      -----       -----
                                                                                                           
Initial Percentage ........................  100        100         100         100         100        100 
November 7, 2000 ..........................  100        100         100         100         100        100 
November 7, 2001 ..........................  100        100         100         100         100        100 
November 7, 2002 ..........................  100        100         100         100         100        100 
November 7, 2003 ..........................  100        100         100         100         100        100 
November 7, 2004 ..........................  100        100         100         100         100         89 
November 7, 2005 ..........................  100        100         100         100          79         63 
November 7, 2006 ..........................  100        100         100          91          58         44 
November 7, 2007 ..........................  100        100          87          69          40         28 
November 7, 2008 ..........................  100         85          67          51          25         15 
November 7, 2009 ..........................  100         67          50          36          13          5 
November 7, 2010 ..........................  100         51          36          23           4          0 
November 7, 2011 ..........................  100         36          23           0           0          0 
November 7, 2012 ..........................  100          0           0           0           0          0 
November 7, 2013 ..........................  100          0           0           0           0          0 
November 7, 2014 ..........................  100          0           0           0           0          0 
November 7, 2015 ..........................  100          0           0           0           0          0 
November 7, 2016 ..........................  100          0           0           0           0          0 
November 7, 2017 ..........................   97          0           0           0           0          0 
November 7, 2018 ..........................   78          0           0           0           0          0 
November 7, 2019 ..........................   60          0           0           0           0          0 
November 7, 2020 ..........................    0          0           0           0           0          0 
November 7, 2021 ..........................    0          0           0           0           0          0 
November 7, 2022 ..........................    0          0           0           0           0          0 
November 7, 2023 ..........................    0          0           0           0           0          0 
November 7, 2024 ..........................    0          0           0           0           0          0 
November 7, 2025 ..........................    0          0           0           0           0          0 
November 7, 2026 ..........................    0          0           0           0           0          0 
November 7, 2027 ..........................    0          0           0           0           0          0 
November 7, 2028 ..........................    0          0           0           0           0          0 
November 7, 2029 ..........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) .......... 19.8       11.0        10.1         9.2         7.7        6.9 

------------                                                          
(1)  The weighted  average life of the Class I A-4 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I A-4  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I A-4 Principal Balance.                

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Percent of the Original Principal Balance of the Class I A-5
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]

                                                       Prepayments (% of Prepayment Model)             
                                        ---------------------------------------------------------------
                                         0%        175%        200%        225%       275%        300% 
                                        ----       -----       -----       -----      -----       -----
                                                                                                       
Initial Percentage ....................  100        100         100         100         100        100 
November 7, 2000 ......................  100        100         100         100         100        100 
November 7, 2001 ......................  100        100         100         100         100        100 
November 7, 2002 ......................  100        100         100         100         100        100 
November 7, 2003 ......................  100        100         100         100         100        100 
November 7, 2004 ......................  100        100         100         100         100        100 
November 7, 2005 ......................  100        100         100         100         100        100 
November 7, 2006 ......................  100        100         100         100         100        100 
November 7, 2007 ......................  100        100         100         100         100        100 
November 7, 2008 ......................  100        100         100         100         100        100 
November 7, 2009 ......................  100        100         100         100         100        100 
November 7, 2010 ......................  100        100         100         100         100          0 
November 7, 2011 ......................  100        100         100           0           0          0 
November 7, 2012 ......................  100          0           0           0           0          0 
November 7, 2013 ......................  100          0           0           0           0          0 
November 7, 2014 ......................  100          0           0           0           0          0 
November 7, 2015 ......................  100          0           0           0           0          0 
November 7, 2016 ......................  100          0           0           0           0          0 
November 7, 2017 ......................  100          0           0           0           0          0 
November 7, 2018 ......................  100          0           0           0           0          0 
November 7, 2019 ......................  100          0           0           0           0          0 
November 7, 2020 ......................    0          0           0           0           0          0 
November 7, 2021 ......................    0          0           0           0           0          0 
November 7, 2022 ......................    0          0           0           0           0          0 
November 7, 2023 ......................    0          0           0           0           0          0 
November 7, 2024 ......................    0          0           0           0           0          0 
November 7, 2025 ......................    0          0           0           0           0          0 
November 7, 2026 ......................    0          0           0           0           0          0 
November 7, 2027 ......................    0          0           0           0           0          0 
November 7, 2028 ......................    0          0           0           0           0          0 
November 7, 2029 ......................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ...... 20.4       12.9        12.4        11.9        11.1       10.8 

------------                                                          
(1)  The weighted  average life of the Class I A-5 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I A-5  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I A-5 Principal Balance.                

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Percent of the Original Principal Balance of the Class I M-1
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        225%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100         100         100        100 
November 7, 2004 .........................  100        100         100         100         100        100 
November 7, 2005 .........................  100         85          84          82          79         78 
November 7, 2006 .........................  100         73          70          68          63         61 
November 7, 2007 .........................  100         61          58          55          50         47 
November 7, 2008 .........................  100         51          48          45          39         36 
November 7, 2009 .........................  100         43          39          36          30         28 
November 7, 2010 .........................  100         36          32          29          23          0 
November 7, 2011 .........................   95         29          26           0           0          0 
November 7, 2012 .........................   87          0           0           0           0          0 
November 7, 2013 .........................   79          0           0           0           0          0 
November 7, 2014 .........................   70          0           0           0           0          0 
November 7, 2015 .........................   63          0           0           0           0          0 
November 7, 2016 .........................   55          0           0           0           0          0 
November 7, 2017 .........................   48          0           0           0           0          0 
November 7, 2018 .........................   41          0           0           0           0          0 
November 7, 2019 .........................   34          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 17.2        9.4         9.0         8.7         8.2        8.0 

------------                                                          
(1)  The weighted  average life of the Class I M-1 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I M-1  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I M-1 Principal Balance.                

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Percent of the Original Principal Balance of the Class I B-1
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        225%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100         100         100        100 
November 7, 2004 .........................  100        100         100         100         100        100 
November 7, 2005 .........................  100         61          57          54          46         42 
November 7, 2006 .........................  100         28          22          16           3          0 
November 7, 2007 .........................  100          0           0           0           0          0 
November 7, 2008 .........................  100          0           0           0           0          0 
November 7, 2009 .........................  100          0           0           0           0          0 
November 7, 2010 .........................  100          0           0           0           0          0 
November 7, 2011 .........................   86          0           0           0           0          0 
November 7, 2012 .........................   66          0           0           0           0          0 
November 7, 2013 .........................   44          0           0           0           0          0 
November 7, 2014 .........................   22          0           0           0           0          0 
November 7, 2015 .........................    3          0           0           0           0          0 
November 7, 2016 .........................    0          0           0           0           0          0 
November 7, 2017 .........................    0          0           0           0           0          0 
November 7, 2018 .........................    0          0           0           0           0          0 
November 7, 2019 .........................    0          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 13.7        6.4         6.2         6.1         5.9        5.9 

------------                                                          
(1)  The weighted  average life of the Class I B-1 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I B-1  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I B-1 Principal Balance.                

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Percent of the Original Principal Balance of the Class I B-2
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        225%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100         100         100        100 
November 7, 2004 .........................  100        100         100         100         100        100 
November 7, 2005 .........................  100        100         100         100         100        100 
November 7, 2006 .........................  100        100         100         100         100         98 
November 7, 2007 .........................  100         99          94          90          81         76 
November 7, 2008 .........................  100         83          78          72          63         58 
November 7, 2009 .........................  100         69          64          58          49         45 
November 7, 2010 .........................  100         57          52          47          38          0 
November 7, 2011 .........................  100         47          42           0           0          0 
November 7, 2012 .........................  100          0           0           0           0          0 
November 7, 2013 .........................  100          0           0           0           0          0 
November 7, 2014 .........................  100          0           0           0           0          0 
November 7, 2015 .........................  100          0           0           0           0          0 
November 7, 2016 .........................   89          0           0           0           0          0 
November 7, 2017 .........................   78          0           0           0           0          0 
November 7, 2018 .........................   66          0           0           0           0          0 
November 7, 2019 .........................   54          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 19.3       11.2        10.7        10.3         9.6        9.3 

------------                                                          
(1)  The weighted  average life of the Class I B-2 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class I B-2  Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class I B-2 Principal Balance.                

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Group II Assumptions                                                            

      The tables set forth below assume that there are no  delinquencies  on the
Group II  Contracts  and that  there  will be a  sufficient  Group II  Available
Distribution  Amount to distribute interest on the Group II Certificates and the
Group II Formula Principal  Distribution Amount to the  Certificateholders  then
entitled thereto.                                                               

      The  percentages and weighted  average lives in the following  tables were
determined  assuming that (i) scheduled  interest and principal  payments on the
Group II Contracts are received in a timely manner and  prepayments  are made at
the indicated  percentages of the Prepayment Model set forth in the tables; (ii)
the  Servicer  or the  Company  exercises  its  right  of  optional  termination
described  above;  (iii) the Group II Contracts will, as of the Cut-off Date, be
grouped into six pools  having the  additional  characteristics  set forth below
under "Assumed Contract  Characteristics  for Group II"; (iv) one-month LIBOR is
5.4588% and five year CMT is 6.0900%;  (v) the Original Class Principal  Balance
and the Remittance  Rate of each Class of Group II  Certificates is as set forth
under  "Summary  Information";   (vi)  no  interest  shortfalls  will  arise  in
connection with  prepayment in full of the Group II Contracts;  (vii) there will
be no losses on the Group II Contracts;  (viii) the Group II  Performance  Tests
are satisfied; (ix) the Group I Contracts prepay at 225% of the Prepayment Model
except in the case of the 0% of the Prepayment Model scenario in which the Group
I  Contracts  prepay  at 0% of the  Prepayment  Model;  and  (x)  the  Group  II
Certificates are purchased on November 30, 1999. No  representation is made that
the Contracts will experience  delinquencies  or losses at the respective  rates
assumed above or at any other rates.                                            

 Assumed Contract Characteristics for Group II

                                                        [Enlarge/Download Table]


                                                                           Remaining    Original  
                                               Current                      Term to      Term to  
                                              Principal        Current      Maturity     Maturity 
                   Pool                        Balance           APR        (Months)    (Months)  
 ----------------------------------------  --------------   ------------  -----------  -----------
                                                                                                  
1 .......................................  $  2,930,324.68     9.9930%        238           244   
2 .......................................    32,172,971.06    10.1180         232           233   
3 .......................................    44,650,537.36    10.0570         238           239   
4 .......................................    40,911,915.48    10.2790         240           240   
5 .......................................     8,692,645.73    10.4630         244           244   
6 .......................................     2,910,505.48    10.6970         251           251   
                                           ---------------                                        
   Total ................................  $132,268,899.79                                        
                                           ===============                                        

                                                        [Enlarge/Download Table]


                                                              First                                         
                        Lifetime  Lifetime  Periodic        Adjustment          Adjustment                  
                Gross     Rate      Rate      Rate             Date             Frequency                   
     Pool      Margin     Cap       Floor     Cap            (Months)            (Months)          Index    
 ------------  -------   ------   -------    ------   ---------------------  ----------------  -------------
                                                      Interest      Payment  Interest Payment               
                                                      ---------------------  ----------------               
                                                                                                            
1 ...........  4.7150%  15.9390%   4.7150%   1.7740%      7            8        12      12     CMT - 5 year 
2 ...........  4.5210   15.9220    4.5210    1.6390       9           10        12      12     CMT - 5 year 
3 ...........  4.3180   15.8570    4.3180    1.6120      10           11        12      12     CMT - 5 year 
4 ...........  4.5470   16.0570    4.5470    1.5670      11           12        12      12     CMT - 5 year 
5 ...........  4.7330   16.1550    4.7330    1.3450      12           13        12      12     CMT - 5 year 
6 ...........  4.9110   16.5050    4.9110    1.3660      13           14        12      12     CMT - 5 year 

      Since the tables  were  prepared  on the basis of the  assumptions  in the
preceding paragraph,  there are discrepancies between the characteristics of the
actual Contracts and the  characteristics  of the Contracts assumed in preparing
the tables.  Any such discrepancy may have an effect upon the percentages of the
Original  Class  II A-1  Principal  Balance,  Original  Class  II B-1  Principal
Balance,  Original  Class  II  B-2  Principal  Balance,  Original  Class  II B-3
Principal  Balance and Original Class II B-4 Principal  Balance  outstanding and
weighted  average  lives  of  the  Class  II  A-1  Certificates,  Class  II  B-1
Certificates,  Class II B-2 Certificates, Class II B-3 Certificates and Class II
B-4  Certificates  set  forth in the  tables.  In  addition,  since  the  actual
Contracts  and the Trust  Fund have  characteristics  which  differ  from  those
assumed in preparing the tables set forth below, the  distributions of principal
on the each Class of Group II Certificates  may be made earlier or later than as
indicated in the tables.                                                        

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      It is not likely that Contracts will prepay at any constant  percentage of
the  Prepayment  Model to maturity or that all Contracts will prepay at the same
rate.  In addition,  the diverse  remaining  terms to maturity of the  Contracts
(which include recently originated Contracts) could produce slower distributions
of principal  than as indicated in the tables at the various  percentages of the
Prepayment  Model  specified  even if the  weighted  average  remaining  term to
maturity of the Contracts is the same as the weighted average  remaining term to
maturity of the Assumed Contract Characteristics.                               

      Investors  are urged to make their  investment  decisions  on a basis that
includes their determination as to anticipated  prepayment rates under a variety
of the assumptions discussed herein.                                            

      Based on the  foregoing  assumptions,  the following  tables  indicate the
resulting  weighted  average  lives  of  the  Certificates  and  set  forth  the
percentage of the Original Class Principal  Balance of each Group II Certificate
that  would be  outstanding  after  each of the  dates  shown  at the  indicated
percentages of the Prepayment Model.                                            

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 Percent of the Original Principal Balance of the Class II A-1
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]

                                                            Prepayments (% of Prepayment Model)             
                                            ----------------------------------------------------------------
                                              0%        175%        200%        250%       275%        300% 
                                             ----       -----       -----       -----      -----       -----
                                                                                                            
Initial Percentage ........................   100        100         100         100         100        100 
November 7, 2000 ..........................    93         83          82          79          78         76 
November 7, 2001 ..........................    91         70          67          62          59         56 
November 7, 2002 ..........................    88         57          53          45          42         38 
November 7, 2003 ..........................    86         45          40          31          27         23 
November 7, 2004 ..........................    82         35          29          20          15         11 
November 7, 2005 ..........................    79         31          28          20          15         11 
November 7, 2006 ..........................    75         27          24          19          15         11 
November 7, 2007 ..........................    71         23          20          15          14         11 
November 7, 2008 ..........................    66         20          17          13          11          9 
November 7, 2009 ..........................    61         17          14          10           9          7 
November 7, 2010 ..........................    55         14          12           8           7          6 
November 7, 2011 ..........................    48         12          10           0           0          0 
November 7, 2012 ..........................    41          9           0           0           0          0 
November 7, 2013 ..........................    34          0           0           0           0          0 
November 7, 2014 ..........................    30          0           0           0           0          0 
November 7, 2015 ..........................    25          0           0           0           0          0 
November 7, 2016 ..........................    19          0           0           0           0          0 
November 7, 2017 ..........................    13          0           0           0           0          0 
November 7, 2018 ..........................     6          0           0           0           0          0 
November 7, 2019 ..........................     0          0           0           0           0          0 
November 7, 2020 ..........................     0          0           0           0           0          0 
November 7, 2021 ..........................     0          0           0           0           0          0 
November 7, 2022 ..........................     0          0           0           0           0          0 
November 7, 2023 ..........................     0          0           0           0           0          0 
November 7, 2024 ..........................     0          0           0           0           0          0 
November 7, 2025 ..........................     0          0           0           0           0          0 
November 7, 2026 ..........................     0          0           0           0           0          0 
November 7, 2027 ..........................     0          0           0           0           0          0 
November 7, 2028 ..........................     0          0           0           0           0          0 
November 7, 2029 ..........................     0          0           0           0           0          0 
Weighted Average Life (years)(1) ..........  11.1        4.9         4.4         3.7         3.4        3.1 

------------                                                          
(1)  The weighted average life of the Class II A-1 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class II A-1 Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class II A-1 Principal Balance.               

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 Percent of the Original Principal Balance of the Class II B-1
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                            Prepayments (% of Prepayment Model)             
                                           -----------------------------------------------------------------
                                              0%        175%        200%        250%       275%        300% 
                                             ----       -----       -----       -----      -----       -----
                                                                                                            
Initial Percentage .......................    100        100         100         100         100        100 
November 7, 2000 .........................    100        100         100         100         100        100 
November 7, 2001 .........................    100        100         100         100         100        100 
November 7, 2002 .........................    100        100         100         100         100        100 
November 7, 2003 .........................    100        100         100         100         100        100 
November 7, 2004 .........................    100        100         100         100         100        100 
November 7, 2005 .........................    100         62          43          36          38         41 
November 7, 2006 .........................    100         34          16           0           0          0 
November 7, 2007 .........................    100         10           0           0           0          0 
November 7, 2008 .........................    100          0           0           0           0          0 
November 7, 2009 .........................    100          0           0           0           0          0 
November 7, 2010 .........................    100          0           0           0           0          0 
November 7, 2011 .........................    100          0           0           0           0          0 
November 7, 2012 .........................    100          0           0           0           0          0 
November 7, 2013 .........................     86          0           0           0           0          0 
November 7, 2014 .........................     55          0           0           0           0          0 
November 7, 2015 .........................     22          0           0           0           0          0 
November 7, 2016 .........................      0          0           0           0           0          0 
November 7, 2017 .........................      0          0           0           0           0          0 
November 7, 2018 .........................      0          0           0           0           0          0 
November 7, 2019 .........................      0          0           0           0           0          0 
November 7, 2020 .........................      0          0           0           0           0          0 
November 7, 2021 .........................      0          0           0           0           0          0 
November 7, 2022 .........................      0          0           0           0           0          0 
November 7, 2023 .........................      0          0           0           0           0          0 
November 7, 2024 .........................      0          0           0           0           0          0 
November 7, 2025 .........................      0          0           0           0           0          0 
November 7, 2026 .........................      0          0           0           0           0          0 
November 7, 2027 .........................      0          0           0           0           0          0 
November 7, 2028 .........................      0          0           0           0           0          0 
November 7, 2029 .........................      0          0           0           0           0          0 
Weighted Average Life (years)(1) .........   15.1        6.5         6.0         5.8         5.8        5.9 

------------                                                          
(1)  The weighted average life of the Class II B-1 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class II B-1 Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class II B-1 Principal Balance.               

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 Percent of the Original Principal Balance of the Class II B-2
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        250%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100         100         100        100 
November 7, 2004 .........................  100        100         100         100         100        100 
November 7, 2005 .........................  100        100         100         100         100        100 
November 7, 2006 .........................  100        100         100          47          38         52 
November 7, 2007 .........................  100        100          73           0           0          0 
November 7, 2008 .........................  100         60           3           0           0          0 
November 7, 2009 .........................  100          0           0           0           0          0 
November 7, 2010 .........................  100          0           0           0           0          0 
November 7, 2011 .........................  100          0           0           0           0          0 
November 7, 2012 .........................  100          0           0           0           0          0 
November 7, 2013 .........................  100          0           0           0           0          0 
November 7, 2014 .........................  100          0           0           0           0          0 
November 7, 2015 .........................  100          0           0           0           0          0 
November 7, 2016 .........................   53          0           0           0           0          0 
November 7, 2017 .........................    0          0           0           0           0          0 
November 7, 2018 .........................    0          0           0           0           0          0 
November 7, 2019 .........................    0          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 17.0        9.1         8.3         7.0         6.9        7.0 

------------                                                          
(1)  The weighted average life of the Class II B-2 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class II B-2 Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class II B-2 Principal Balance.               

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 Percent of the Original Principal Balance of the Class II B-3
 Certificates at the Respective Percentages of the
 Prepayment Model Set Forth Below:

                                                        [Enlarge/Download Table]


                                                         Prepayments (% of Prepayment Model)             
                                          ---------------------------------------------------------------
                                           0%        175%        200%        250%       275%        300% 
                                          ----       -----       -----       -----      -----       -----
                                                                                                         
Initial Percentage ......................  100        100         100         100         100        100 
November 7, 2000 ........................  100        100         100         100         100        100 
November 7, 2001 ........................  100        100         100         100         100        100 
November 7, 2002 ........................  100        100         100         100         100        100 
November 7, 2003 ........................  100        100         100         100         100        100 
November 7, 2004 ........................  100        100         100         100         100        100 
November 7, 2005 ........................  100        100         100         100         100        100 
November 7, 2006 ........................  100        100         100         100         100        100 
November 7, 2007 ........................  100        100         100          78          46         27 
November 7, 2008 ........................  100        100         100          31           1          0 
November 7, 2009 ........................  100         97          56           0           0          0 
November 7, 2010 ........................  100         53          16           0           0          0 
November 7, 2011 ........................  100         14           0           0           0          0 
November 7, 2012 ........................  100          0           0           0           0          0 
November 7, 2013 ........................  100          0           0           0           0          0 
November 7, 2014 ........................  100          0           0           0           0          0 
November 7, 2015 ........................  100          0           0           0           0          0 
November 7, 2016 ........................  100          0           0           0           0          0 
November 7, 2017 ........................   38          0           0           0           0          0 
November 7, 2018 ........................    0          0           0           0           0          0 
November 7, 2019 ........................    0          0           0           0           0          0 
November 7, 2020 ........................    0          0           0           0           0          0 
November 7, 2021 ........................    0          0           0           0           0          0 
November 7, 2022 ........................    0          0           0           0           0          0 
November 7, 2023 ........................    0          0           0           0           0          0 
November 7, 2024 ........................    0          0           0           0           0          0 
November 7, 2025 ........................    0          0           0           0           0          0 
November 7, 2026 ........................    0          0           0           0           0          0 
November 7, 2027 ........................    0          0           0           0           0          0 
November 7, 2028 ........................    0          0           0           0           0          0 
November 7, 2029 ........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ........ 17.9       11.1        10.1         8.6         8.0        7.8 

------------                                                          
(1)  The weighted average life of the Class II B-3 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class II B-3 Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class II B-3 Principal Balance.               

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Percent of the Original Principal Balance of the Class II B-4 
Certificates at the Respective Percentages of the 
Prepayment Model Set Forth Below: 

                                                        [Enlarge/Download Table]


                                                          Prepayments (% of Prepayment Model)             
                                           ---------------------------------------------------------------
                                            0%        175%        200%        250%       275%        300% 
                                           ----       -----       -----       -----      -----       -----
                                                                                                          
Initial Percentage .......................  100        100         100         100         100        100 
November 7, 2000 .........................  100        100         100         100         100        100 
November 7, 2001 .........................  100        100         100         100         100        100 
November 7, 2002 .........................  100        100         100         100         100        100 
November 7, 2003 .........................  100        100         100         100         100        100 
November 7, 2004 .........................  100        100         100         100         100        100 
November 7, 2005 .........................  100        100         100         100         100        100 
November 7, 2006 .........................  100        100         100         100         100        100 
November 7, 2007 .........................  100        100         100         100         100        100 
November 7, 2008 .........................  100        100         100         100         100         86 
November 7, 2009 .........................  100        100         100          95          80         67 
November 7, 2010 .........................  100        100         100          75          62         49 
November 7, 2011 .........................  100        100          89           0           0          0 
November 7, 2012 .........................  100         88           0           0           0          0 
November 7, 2013 .........................  100          0           0           0           0          0 
November 7, 2014 .........................  100          0           0           0           0          0 
November 7, 2015 .........................  100          0           0           0           0          0 
November 7, 2016 .........................  100          0           0           0           0          0 
November 7, 2017 .........................  100          0           0           0           0          0 
November 7, 2018 .........................   56          0           0           0           0          0 
November 7, 2019 .........................    0          0           0           0           0          0 
November 7, 2020 .........................    0          0           0           0           0          0 
November 7, 2021 .........................    0          0           0           0           0          0 
November 7, 2022 .........................    0          0           0           0           0          0 
November 7, 2023 .........................    0          0           0           0           0          0 
November 7, 2024 .........................    0          0           0           0           0          0 
November 7, 2025 .........................    0          0           0           0           0          0 
November 7, 2026 .........................    0          0           0           0           0          0 
November 7, 2027 .........................    0          0           0           0           0          0 
November 7, 2028 .........................    0          0           0           0           0          0 
November 7, 2029 .........................    0          0           0           0           0          0 
Weighted Average Life (years)(1) ......... 19.1       13.3        12.6        11.4        10.9       10.4 

------------                                                          
(1)  The weighted average life of the Class II B-4 Certificates is determined by
     (i) multiplying the amount of each principal  distribution by the number of
     years from the initial date of issuance of the Class II B-4 Certificates to
     the related  Remittance  Date,  (ii) summing the results and (iii) dividing
the sum by the Original Class II B-4 Principal Balance.               

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 DESCRIPTION OF THE CERTIFICATES

      The  Certificates  will be issued  pursuant to the Agreement.  A copy of a
general  form of a Pooling  and  Servicing  Agreement  has been  filed  with the
Securities and Exchange Commission (the  "Commission").  A copy of the execution
form of the  Agreement  (without  certain  exhibits)  will  be  filed  with  the
Securities  and  Exchange   Commission   after  the  initial   issuance  of  the
Certificates.  The following  description  supplements  the  description  of the
Agreement  and  the   Certificates   under  the  caption   "Description  of  the
Certificates"  in the  Prospectus  and  must be  read  together  therewith.  The
following  summaries describe certain terms of the Agreement,  do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, the provisions of the Agreement. When particular provisions or terms used in
the Agreement are referred to, the actual provisions  (including  definitions of
terms) are incorporated by reference.                                           

General                                                                         

      The Trust will issue  fourteen  classes (each a "Class") of  certificates.
Each  Class  (other  than  the  Class R  Certificate)  will be  issued  in fully
registered  form only,  in  denominations  of $50,000 and integral  multiples of
$1,000 in excess thereof,  except for a denomination  representing the remainder
of a Class of Certificates.  The undivided  percentage interest (the "Percentage
Interest")  of  each  Class  of  Certificates  in  the   distributions  on  such
Certificates  will  be  equal  to the  percentage  obtained  from  dividing  the
denomination of such Certificate by the Original Class Principal Balance of such
Class of Certificates.  Definitive Certificates, if issued, will be transferable
and exchangeable at the corporate trust office of the Trustee. No service charge
will be made for any  registration of exchange or transfer,  but the Trustee may
require  payment  of a sum  sufficient  to cover  any tax or other  governmental
charge.                                                                         

      The  Certificates  evidence  undivided  interests in the Contract Pool and
certain other  property held in trust for the benefit of the  Certificateholders
(the  "Trust  Fund").  The  Certificates  will  consist  of (a)  two  groups  of
certificates  (each, a "Group") including the "Group I Certificates"  consisting
of four  classes of senior  certificates  (the "Class I A-1  Certificates,"  the
"Class I A-2  Certificates," the "Class I A-3 Certificates" and the "Class I A-4
Certificates")  and four classes of subordinated  certificates (the "Class I A-5
Certificates,"  the "Class I M-1  Certificates,"  the "Class I B-1 Certificates"
and the "Class I B-2 Certificates")  and the "Group II Certificates"  consisting
of one class of senior  certificates (the "Class II A-1  Certificates") and four
classes of  subordinated  certificates  (the  "Class II B-1  Certificates,"  the
"Class II B-2  Certificates",  the "Class II B-3 Certificates" and the "Class II
B-4  Certificates")  and (b) one class of  residual  certificates  (the "Class R
Certificate").  The Class I A-1 Certificates,  Class I A-2 Certificates, Class I
A-3  Certificates  and Class I A-4  Certificates  will evidence in the aggregate
approximate  initial  27.76%,  20.01%,  16.78% and 16.45%  undivided  interests,
respectively, in the "Group I Contracts". The Class I A-5 Certificates,  Class I
M-1  Certificates,  Class I B-1 Certificates  and Class I B-2 Certificates  will
evidence in the aggregate  approximate  initial  4.50%,  4.00%,  4.00% and 6.50%
undivided interests,  respectively,  in the Group I Contracts.  The Class II A-1
Certificates,  the Class II B-1 Certificates, the Class II B-2 Certificates, the
Class II B-3 Certificates and the Class II B-4 Certificates will evidence in the
aggregate  approximate initial 76.00%,  10.00%, 3.00%, 4.00% and 7.00% undivided
interests, respectively, in the "Group II Contracts".                           

      The Trust Fund  includes (i) the Contract  Pool,  including  all rights to
receive  payments on the Contracts  received on or after the Cut-off Date,  (ii)
the amounts held from time to time in trust  accounts (with respect to the Group
I Certificates,  the "Group I Certificate Account" and with respect to the Group
II Certificates,  the "Group II Certificate  Account") maintained by the Trustee
pursuant to the Agreement, (iii) any property which initially secured a Contract
and which is acquired in the process of realizing  thereon and (iv) the proceeds
of all insurance policies described herein.                                     

      The Company  will cause the  Contracts  to be assigned to the Trustee or a
co-trustee. The Company, as Servicer, will service the Contracts pursuant to the
Agreement.  The Servicer may perform any of its servicing  obligations under the
Agreement   through  one  or  more   subservicers.   Notwithstanding   any  such
subservicing  arrangement,  the Servicer  will remain  liable for its  servicing
duties  and  obligations  under the  Agreement  as if the  Servicer  alone  were
servicing the Contracts.  The Contract documents will be held for the benefit of
the  Trustee  by the  Servicer  (other  than  certain  documents  related to the
Land-and-Home Contracts and the Mortgage Loans which will be held by a custodian
on behalf of the Trustee).                                                      

      Distributions of principal and interest on the  Certificates  will be made
on the 7th day of each month,  or, if such day is not a business  day,  the next
succeeding  business day (each, a "Remittance Date") beginning in December 1999,
to the persons in whose names the  Certificates  are  registered at the close of
business on the related Record                                                  

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Date. The "Record Date" means (a) with respect to the initial  Remittance  Date,
the Closing Date,  (b) with respect to any  Remittance  Date  thereafter and the
Fixed Rate Certificates,  the last business day of the month preceding the month
of the  related  Remittance  Date,  (c)  with  respect  to any  Remittance  Date
thereafter  and the Floating Rate  Certificates,  the business day preceding the
related  Remittance  Date;  provided,  however,  in the  event  that  Definitive
Certificates are issued with respect to a Class of Certificates, the Record Date
with  respect to such Class will be the close of business  on the last  business
Day of the  month  preceding  the  month  of the  related  Remittance  Date.  If
definitive Offered Certificates are issued,  distributions will be made by check
mailed to the  address  of the  person  entitled  thereto  as it  appears on the
Certificate Register, except that a holder of Offered Certificates with original
denominations  aggregating  at least $5  million  may  request  payment  by wire
transfer of funds pursuant to written  instructions  delivered to the Trustee at
least five business  days prior to the Record Date.  The final  distribution  in
retirement of the Certificates will be made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee in New York, New York
specified in the final distribution notice to Certificateholders.               

Conveyance of Contracts                                                         

      In  addition  to  the  representations  and  warranties  described  in the
Prospectus  under  "Description of  Certificates--Conveyance  of Contracts," the
Company has also made certain  warranties  with respect to the  Contracts in the
aggregate,  including  that (i) the aggregate  principal  amount  payable by the
Obligors as of the Cut-off Date equals the Cut-off Date Pool Principal  Balance;
(ii) (a)  approximately  58.74% of the Group I Cut-off Date Principal Balance is
attributable  to loans to  purchase  new  Manufactured  Homes and  approximately
41.26% of the Group I Cut-off Date Principal Balance is attributable to loans to
purchase used Manufactured  Homes and (b)  approximately  80.68% of the Group II
Cut-off  Date  Principal  Balance  is  attributable  to  loans to  purchase  new
Manufactured  Homes  and  approximately  19.32%  of the  Group II  Cut-off  Date
Principal Balance is attributable to loans to purchase used Manufactured  Homes;
(iii) no  Contract  has a remaining  maturity of more than 360 months;  (iv) the
date of  origination  of each Contract is on or after July 29, 1989;  and (v) no
adverse selection procedures were employed in selecting the Contracts.  Payments
on Contracts                                                                    

      The Trustee will establish and maintain the Certificate  Accounts (i) at a
depository  institution  organized  under the laws of the  United  States or any
state,  the deposits of which are insured to the full extent permitted by law by
the Federal Deposit Insurance Corporation (the "FDIC") whose commercial paper or
unsecured  short-term debt has a rating of P-1 by Moody's and F1+ by Fitch,  and
which is subject to examination by federal or state  authorities or a depository
institution  otherwise  acceptable  to Moody's and Fitch,  (ii) in the corporate
trust department of the Trustee or (iii) at an institution  otherwise acceptable
to Moody's  and Fitch (an  "Eligible  Institution").  Funds in each  Certificate
Account will be invested in Eligible  Investments  (as defined in the Agreement)
that will mature or be subject to  redemption  not later than the  business  day
preceding the applicable monthly Remittance Date. Eligible  Investments include,
among  other  investments,  obligations  of the  United  States or of any agency
thereof backed by the full faith and credit of the United States; federal funds,
certificates of deposit, time deposits and bankers' acceptances sold by eligible
financial institutions;  commercial paper rated P-1 by Moody's and F1+ by Fitch;
money market funds  acceptable  to the Rating  Agencies;  and other  obligations
acceptable to the Rating Agencies.                                              

      All  payments  in respect  of  principal  and  interest  on the  Contracts
received  by the  Servicer,  including  Principal  Prepayments  and  Liquidation
Proceeds  (net  of  Liquidation  Expenses),  will be paid  into  the  applicable
Certificate  Account no later than the second  business  day  following  receipt
thereof.  Amounts received as late payment fees, extension fees, assumption fees
or similar fees will be retained by the Servicer as part of its servicing  fees.
See  "Description  of the  Certificates--Servicing--Servicing  Compensation  and
Payment of Expenses" in the Prospectus. In addition, amounts paid by the Company
for Contracts  repurchased as a result of breach of a representation or warranty
under the Agreement and amounts required to be deposited upon substitution of an
Eligible  Substitute Contract because of breach of a representation or warranty,
as  described  under  "Conveyance  of  Contracts"  above,  will be paid into the
applicable  Certificate  Account.  The Servicer will deposit the Monthly Advance
(described  under  "Advances"  below),  if any,  in the  applicable  Certificate
Account on or before each Determination Date.                                   

      On  the  fifth   business   day  prior  to  each   Remittance   Date  (the
"Determination  Date"),  the Servicer will determine the Available  Distribution
Amount and the amounts to be distributed on the  Certificates  for the following
Remittance Date.                                                                

      The  Available  Distribution  Amount for a Group (the  "Group I  Available
Distribution  Amount"  or the  "Group  II  Available  Distribution  Amount,"  as
applicable) is the sum of (a) the Monthly  Advance  relating to the Contracts in

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such  Group  for  such  Remittance  Date  and  (b)  the  amount  in the  related
Certificate  Account on the close of business on the last day of the immediately
preceding  Due Period less the sum of (i)  scheduled  payments for  Contracts in
such Group  that are due in a Due Period  subsequent  to such Due  Period;  (ii)
payments on Contracts in such Group that have been  repurchased as a result of a
breach of a representation or warranty and any other payments not required to be
deposited  in the  related  Certificate  Account;  (iii)  reimbursements  to the
Servicer in the amount of Liquidation  Expenses incurred and taxes and insurance
premiums advanced by the Servicer in respect of Contracts in such Group; (iv) if
the Company is no longer the Servicer,  the related Monthly  Servicing Fee equal
to 1/12th of the product of 1.25% and the Pool Scheduled  Principal  Balance for
such Group for the immediately  preceding Remittance Date; (v) reimbursements to
the Servicer for  Nonrecoverable  Advances and Monthly Advances  relating to the
Contracts  in such  Group in  respect  of  Liquidated  Contracts,  to the extent
permitted  by the  Agreement;  and (vi)  certain  expenses  reimbursable  to the
Company as provided in the Agreement.                                           

      The  "Due  Period"  with  respect  to any  Remittance  Date is the  period
beginning  on the 26th  day of the  second  month  preceding  the  month of such
Remittance  Date and ending on the 25th day of the month  preceding the month of
such Remittance Date.                                                           

      The Trustee or its Paying Agent will  withdraw  funds from the  applicable
Certificate   Account  (but  only  to  the  extent  of  the  related   Available
Distribution Amount) to make payments to  Certificateholders  as specified under
"Distributions"  below.  From time to time,  as provided in the  Agreement,  the
Servicer will also withdraw funds from the Certificate  Account to make payments
to it as permitted by the Agreement and described in clauses (ii), (iii),  (iv),
(v) and (vi) in the previous paragraph.                                         

Distributions                                                                   

      Distributions  of  principal  and  interest  to  holders  of  a  Class  of
Certificates  will be made on each  Remittance  Date in an  amount  equal to the
respective  Percentage  Interests multiplied by the aggregate amount distributed
on such Class of Certificates on such Remittance Date.                          

      Each distribution with respect to a Book-Entry Certificate will be paid to
DTC,  which will credit the amount of such  distribution  to the accounts of its
Participants in accordance with its normal procedures.  Each Participant will be
responsible for disbursing such  distribution to the Certificate  Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect  participating  firm") for which it acts as agent.  Each  brokerage
firm will be responsible for disbursing funds to the Certificate  Owners that it
represents.  All such  credits  and  disbursements  with  respect to  Book-Entry
Certificates are to be made by DTC and the Participants in accordance with DTC's
rules.                                                                          

Interest Distributions:                                             

      With respect to each  Remittance  Date, the Fixed Rate  Certificates  will
accrue  interest in respect of each calendar  month  preceding  such  Remittance
Date.  With  respect to each  Remittance  Date (other than the first  Remittance
Date), the Floating Rate  Certificates  will accrue interest from the Remittance
Date in the preceding  calendar  month through the day preceding the  Remittance
Date in the current  calendar month.  With respect to the first Remittance Date,
the  Floating  Rate   Certificates  will  accrue  interest  from  Closing  Date.
Distributions  to a Class of  Certificateholders  will be  applied  first to the
payment of  interest  and,  if any  payment is then due,  then to the payment of
principal.  Interest on the Fixed Rate  Certificates  will be  calculated on the
basis of a 360-day year  consisting  of twelve  30-day  months.  Interest on the
Floating  Rate  Certificates  will be  calculated  on the basis of the number of
actual days elapsed during the related Interest Period and a 360-day year.      

      With respect to the Floating Rate  Certificates  and any Remittance  Date,
the "Interest  Period" shall be the period from the  Remittance  Date  preceding
such  Remittance  Date (or in the case of the first  Remittance  Date,  from the
Closing Date) through the day preceding such  Remittance  Date.  With respect to
each Class of Fixed Rate  Certificates  and any  Remittance  Date, the "Interest
Period" shall be the period from the first day of the calendar  month  preceding
the month of such Remittance Date through the last day of such calendar month.  

      On each Remittance  Date,  holders of each Class of  Certificates  will be
entitled to receive, to the extent of the Group I Available  Distribution Amount
or Group II Available  Distribution Amount, as applicable,  (i) interest accrued
on such  Class  during  the  related  Interest  Period  at the  then  applicable
Remittance Rate on the Principal Balance of                                     

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such Class immediately prior to that Remittance Date (the "Interest Distribution
Amount" for such Class and Remittance Date), plus (ii) any amounts distributable
under  clause  (i)  above or this  clause  (ii) on such  Class  on the  previous
Remittance  Date but not  previously  distributed,  plus, to the extent  legally
permissible,  interest  accrued on any such amount  during the related  Interest
Period  at  the  then  applicable   Remittance  Rate  (the  "Carryover  Interest
Distribution Amount" for such Class and Remittance Date).                       

Remittance Rates of the Certificates                                

      Fixed  Rate   Certificates:   The  Remittance  Rates  on  the  Fixed  Rate
Certificates  listed  below are  subject to a maximum  rate equal to the Group I
Weighted Average Net Contract Rate for the applicable Remittance Date:          

The "Class I A-2 Remittance Rate" shall equal 6.815%.     

The "Class I A-3 Remittance Rate" shall equal 7.060%.     

The "Class I A-4 Remittance Rate" shall equal 7.320%.     

The "Class I A-5 Remittance Rate" shall equal 7.755%.     

The "Class I M-1 Remittance Rate" shall equal 8.050%.     

The "Class I B-1 Remittance Rate" shall equal 8.750%.     

The "Class I B-2 Remittance Rate" shall equal 8.750%.     

 Floating Rate Certificates: The Remittance Rates on the Floating Rate
Certificates are as follows:                                        

           The "Class I A-1  Remittance  Rate" shall equal the lesser of (a) the
           sum of (i) the London  interbank  offered rate for  one-month  United
           States dollar  deposits  ("LIBOR")  appearing on the Telerate  Screen
           Page 3750 as of the second LIBOR  Business Day prior to the first day
           of the related  Interest  Period (or as of two LIBOR Business Days of
           the Closing Date in the case of the first  Interest  Period) and (ii)
           0.20% and (b) the Group I  Weighted  Average  Net  Contract  Rate (as
defined herein) for such Remittance Date.                 

         The "Class II A-1  Remittance  Rate" shall be the lesser of (a) the
   Class II A-1 Formula  Rate and (b) the Net Funds Cap for such
Remittance Date.                                          
         The "Class II B-1  Remittance  Rate" shall be the lesser of (a) the
   Class II B-1 Formula  Rate and (b) the Net Funds Cap for such
Remittance Date.                                          
         The "Class II B-2  Remittance  Rate" shall be the lesser of (a) the
   Class II B-2 Formula  Rate and (b) the Net Funds Cap for such
Remittance Date.                                          
         The "Class II B-3  Remittance  Rate" shall be the lesser of (a) the
   Class II B-3 Formula  Rate and (b) the Net Funds Cap for such
Remittance Date.                                          
         The "Class II B-4  Remittance  Rate" shall be the lesser of (a) the
   Class II B-4 Formula  Rate and (b) the Net Funds Cap for such
Remittance Date.                                          

           If on any Remittance  Date, the Remittance  Rate for any of the Group
           II Certificates is based on the Net Funds Cap,  Certificateholders of
           such Class will be entitled to receive on subsequent Remittance Dates
           the applicable Net Funds Cap Carryover  Amount (as defined herein) to
           the  extent  of  funds  available   therefore  as  described  herein;
           provided,    however,    additional    funds   resulting   from   the
           cross-collateralization  provisions  described  herein  shall  not be
           available  to Group II  Certificateholders  to pay the Net  Funds Cap
Carryover Amount.                                         

      With respect to the Floating Rate  Certificates,  the Remittance Rates for
the  first  Remittance  Date  (the  "Initial  Remittance  Rates")  will  not  be
determined  until two days prior to the  Closing  Date.  Therefore,  the Initial
Remittance  Rates  have not been  determined  as of the date of this  Prospectus
Supplement.                                                                     

      The "Call  Option Date" shall be the  Remittance  Date on which the sum of
the Group I Pool  Scheduled  Principal  Balance and the Group II Pool  Scheduled
Principal Balance has declined to 10% or less of the Cut-off Date Pool Principal
Balance.                                                                        

      The "Class II A-1 Formula Rate" shall be a per annum rate equal to the sum
of (a) LIBOR  (calculated  as described  above) plus (b) (i) with respect to any
Remittance  Date which  occurs on or prior to the Call  Option  Date (as defined
herein),  0.35% or (ii) with respect to any  Remittance  Date which occurs after
the Call Option Date, 0.70%.                                                    

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      The "Class II B-I Formula Rate" shall be a per annum rate equal to the sum
of (a) LIBOR  (calculated  as described  above) plus (b) (i) with respect to any
Remittance Date which occurs on or prior to the Call Option Date,  0.68% or (ii)
with  respect to any  Remittance  Date which  occurs after the Call Option Date,
1.18%.                                                                          

      The "Class II B-2 Formula Rate" shall be a per annum rate equal to the sum
of (a) LIBOR  (calculated  as described  above) plus (b) (i) with respect to any
Remittance Date which occurs on or prior to the Call Option Date,  1.35% or (ii)
with  respect to any  Remittance  Date which  occurs after the Call Option Date,
1.85%.                                                                          

      The "Class II B-3 Formula Rate" shall be a per annum rate equal to the sum
of (a) LIBOR  (calculated  as described  above) plus (b) (i) with respect to any
Remittance Date which occurs on or prior to the Call Option Date,  3.15% or (ii)
with  respect to any  Remittance  Date which  occurs after the Call Option Date,
3.65%.                                                                          

      The "Class II B-4 Formula Rate" shall be a per annum rate equal to the sum
of (a) LIBOR  (calculated  as described  above) plus (b) (i) with respect to any
Remittance Date which occurs on or prior to the Call Option Date,  3.25% or (ii)
with  respect to any  Remittance  Date which  occurs after the Call Option Date,
3.75%.                                                                          

      The "Group I Weighted Average Net Contract Rate" shall be equal to (a) the
weighted  average  of the Group I Contract  Rates  applicable  to the  scheduled
payments due on the  outstanding  Group I Contracts in the Due Period  preceding
such Remittance Date minus (b) (i) if the Company is the Servicer, 0.00% or (ii)
if the Company is no longer the  Servicer,  1.25% of the Group I Pool  Scheduled
Principal Balance on the first day of the related Due Period.                   

      "LIBOR  Business  Day" means a day on which  banks are open for dealing in
foreign currency and exchange in London and New York City; "Telerate Screen Page
3750" means the display page  currently so designated on the Dow Jones  Telerate
Service  (or such other page as may  replace  that page on that  service for the
purpose of displaying comparable rates or prices).                              

      The "Net Funds Cap" for any Remittance Date shall equal the per annum rate
equal to a fraction,  expressed as a  percentage,  the numerator of which equals
the sum of (a) the aggregate amount of interest due on the Group II Contracts on
the related Due Date and (b) the Overcollateralization Reduction Amount, if any,
for such  Distribution  Date less (c)  one-twelfth  of (i) if the Company is the
Servicer,  0.00% or (ii) if the Company is no longer the Servicer,  1.25% of the
Group II Pool  Scheduled  Principal  Balance  on the first day of the Due Period
less (d) one-twelfth of (i) if the actual  Overcollateralization Amount is equal
to or greater than the Required Overcollateralization Amount for such Remittance
Date, 0.00% or (ii) if the actual  Overcollateralization Amount is less than the
Required  Overcollateralization  Amount for such Remittance  Date,  0.75% of the
Group II Pool Scheduled Principal Balance on the first day of the Due Period and
the  denominator of which is equal to the Certificate  Principal  Balance of the
Group II Certificates  (adjusted to reflect the actual number of days elapsed in
the Interest Period divided by 360).                                            

Priority of Distributions:                                          

      A. On  each  Remittance  Date  on  which  the  Class  I M-1 and  Class I B
Principal  Distribution  Test is not met,  the  Group I  Available  Distribution
Amount will be  distributed in the following  amounts in the following  order of
priority:                                                                       

           (i) interest  accrued during the related Interest Period on the Class
      I A-1,  Class I A-2,  Class I A-3 and Class I A-4  Certificates,  at their
      respective  Remittance Rates on the outstanding  Class I A-1, Class I A-2,
      Class I A-3 and Class I A-4  Principal  Balances,  respectively,  together
      with any previously  undistributed shortfalls in interest due on the Class
      I  A-1,  Class  I  A-2,  Class  I  A-3  and  Class  I  A-4   Certificates,
      respectively,  in  respect  of  prior  Remittance  Dates;  if the  Group I
      Available  Distribution  Amount is not  sufficient to distribute  the full
      amount of interest due on Class I A-1,  Class I A-2, Class I A-3 and Class
      I A-4  Certificates,  the Group I  Available  Distribution  Amount will be
      distributed on such Classes of  Certificates  pro rata on the basis of the
interest due thereon;                                               

           (ii) the  Group  I  Formula  Principal  Distribution  Amount  in  the
following order of priority:                    

               (a)  to the  Class  I A-1  Certificates  until  the  Class  I A-1
Principal Balance is reduced to zero;   

               (b)  to the  Class  I A-2  Certificates  until  the  Class  I A-2
Principal Balance is reduced to zero;   

               (c)  to the  Class  I A-3  Certificates  until  the  Class  I A-3
 Principal Balance is reduced to zero; and

               (d)  to the  Class  I A-4  Certificates  until  the  Class  I A-4
Principal Balance is reduced to zero;   

           (iii)  interest  accrued  during the related  Interest  Period on the
      Class I A-5  Principal  Balance  to the  Class I A-5  Certificates  at the
      related  Remittance  Rate,  together  with  any  previously  undistributed
      shortfalls in interest due on the Class I A-5  Certificates  in respect of
prior Remittance Dates;                                             

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           (iv) the  remainder  of the  Group I Formula  Principal  Distribution
      Amount,  if any,  to the  Class I A-5  Certificates  until the Class I A-5
Principal Balance is reduced to zero;                               

           (v) interest  accrued during the related Interest Period on the Class
      I M-1  Principal  Balance to the Class I M-1  Certificates  at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due  on  the  Class  I M-1  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (vi) the  remainder  of the  Group I Formula  Principal  Distribution
      Amount,  if any,  to the  Class I M-1  Certificates  until the Class I M-1
Principal Balance is reduced to zero;                               

           (vii)  interest  accrued  during the related  Interest  Period on the
      Class I B-1  Principal  Balance  to the  Class I B-1  Certificates  at the
      related  Remittance  Rate,  together  with  any  previously  undistributed
      shortfalls in interest due on the Class I B-1  Certificates  in respect of
prior Remittance Dates;                                             

           (viii) the  remainder of the Group I Formula  Principal  Distribution
      Amount,  if any,  to the  Class I B-1  Certificates  until the Class I B-1
Principal Balance is reduced to zero;                               

           (ix) interest accrued during the related Interest Period on the Class
      I B-2  Principal  Balance to the Class I B-2  Certificates  at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due  on  the  Class  I B-2  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (x) the  remainder  of the  Group I  Formula  Principal  Distribution
      Amount,  if any,  to the  Class I B-2  Certificates  until the Class I B-2
Principal Balance is reduced to zero;                               

           (xi) any Group I Monthly Excess Spread (as defined below) to fund any
Group II Available Funds Shortfall;                                             

           (xii)  any  remaining  Group I  Monthly  Excess  Spread  to fund  any
      unfunded Accelerated  Principal Payment (as defined below) on the Group II
      Certificates  after giving effect to the distribution  described in clause
C(xi) or D(xi), as applicable, below;                               

           (xiii)  so  long  as the  Company  is  the  Servicer,  any  remaining
available funds up to the amount equal to                           

      1/12th of the  product of 1.25% and the Group I Pool  Scheduled  Principal
      Balance for such Remittance Date (the "Group I Monthly Servicing Fee"), to
the Servicer;                                                       

           (xiv) the amount of any reimbursement to CHI for Enhancement Payments
      with respect to the Class I B-2 Certificates as provided in the Agreement;

           (xv) so long as the Company is the Servicer,  any remaining available
      funds up to the amount of the Group II Monthly  Servicing  Fee (as defined
      herein),  if any, remaining unpaid after giving effect to the distribution
      described  in clause  C(xiv)  or  D(xiv),  as  applicable,  below,  to the
Servicer;                                                           

           (xvi) the amount of any reimbursement to CHI for Enhancement Payments
with respect to the                                                             

      Class II B-4  Certificates  as provided in the  Agreement,  which  remains
      unpaid after giving effect to the  distribution  described in clause C(xv)
or D(xv), as applicable, below; and                                 

           (xvii)  any  remaining  available  funds to the holder of the Class R
      Certificate,  which will initially be a special purpose  subsidiary of the
      Company. B. On each Remittance Date on which the Class I M-1 and Class I B
Principal Distribution Test is met, the Group I Available           

Distribution  Amount  will  be  distributed  in  the  following  amounts  in the
following order of priority:                                                    

           (i) interest  accrued during the related Interest Period on the Class
      I A-1,  Class I A-2,  Class I A-3 and Class I A-4  Certificates,  at their
      respective  Remittance Rates on the outstanding  Class I A-1, Class I A-2,
      Class I A-3 and Class I A-4Certificates Principal Balances,  respectively,
      together with any previously  undistributed  shortfalls in interest due on
      the Class I A-1,  Class I A-2,  Class I A-3 and Class I A-4  Certificates,
      respectively,  in  respect  of  prior  Remittance  Dates;  if the  Group I
      Available  Distribution  Amount is not  sufficient to distribute  the full
      amount of interest  due on the Class I A-1,  Class I A-2,  Class I A-3 and
      Class I A-4 Certificates,  the Group I Available  Distribution Amount will
      be  distributed on such Classes of  Certificates  pro rata on the basis of
the interest due thereon;                                           

           (ii) the  Class  I A  Percentage  of the  Group I  Formula  Principal
        Distribution  Amount in the following order of priority:

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               (a)  to the  Class  I A-1  Certificates  until  the  Class  I A-1
Principal Balance is reduced to zero;   

               (b)  to the  Class  I A-2  Certificates  until  the  Class  I A-2
Principal Balance is reduced to zero;   

               (c)  to the  Class  I A-3  Certificates  until  the  Class  I A-3
 Principal Balance is reduced to zero; and

               (d)  to the  Class  I A-4  Certificates  until  the  Class  I A-4
Principal Balance is reduced to zero;   

           (iii)  interest  accrued  during the related  Interest  Period on the
Class I A-5 Principal Balance to the                                            

      Class I A-5 Certificates at the related Remittance Rate, together with any
      previously  undistributed  shortfalls  in interest  due on the Class I A-5
Certificates in respect of prior Remittance Dates;                  

           (iv) the remainder of the Class I A Percentage of the Group I Formula
      Principal  Distribution  Amount,  if any, to the Class I A-5  Certificates
until the Class I A-5 Principal Balance is reduced to zero;         

           (v) interest  accrued during the related Interest Period on the Class
      I M-1  Principal  Balance to the Class I M-1  Certificates  at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due  on  the  Class  I M-1  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (vi) the Class I M-1  Percentage  of the  Group I  Formula  Principal
      Distribution  Amount to the Class I M-1 Certificates until the Class I M-1
Principal Balance is reduced to zero;                               

           (vii)  interest  accrued  during the related  Interest  Period on the
Class I B-1 Principal Balance to the                                

      Class I B-1 Certificates at the related Remittance Rate, together with any
      previously  undistributed  shortfalls  in interest  due on the Class I B-1
Certificates in respect of prior Remittance Dates;                  

           (viii)  the Class I B  Percentage  of the  Group I Formula  Principal
      Distribution  Amount to the Class I B-1 Certificates until the Class I B-1
Principal Balance is reduced to zero;                               

           (ix) interest accrued during the related Interest Period on the Class
I B-2 Principal Balance to the                                      

      Class I B-2 Certificates at the related Remittance Rate, together with any
      previously  undistributed  shortfalls  in interest  due on the Class I B-2
Certificates in respect of prior Remittance Dates;                  

           (x) the  remainder  of the  Group I  Formula  Principal  Distribution
      Amount to the  Class I B-2  Certificates  until the Class I B-2  Principal
      Balance is reduced to zero; provided,  however, if the Class I A and Class
      I M-1  Principal  Balances  have not been  reduced  to zero on or before a
      Remittance Date, to the extent that allocations in respect of principal to
      the  Class I B-2  Certificates  would  reduce  the  Class I B-2  Principal
      Balance below the Class I B-2 Floor Amount, then the amount of such excess
      principal  will  instead  be  distributed,  pro  rata,  to the  Class  I A
      Certificates  and the  Class I M-1  Certificates  based  on the  Class I A
      Principal  Balance  and  the  Class  I  M-1  Principal  Balance  prior  to
      distributions  pursuant to clauses B(ii), (iv) and (vi) above with respect
      to such  Remittance  Date.  The  allocations  in  respect  of such  excess
      principal to the Class I A  Certificates  will be in the order of priority
      set forth in clauses B(ii) and (iv) above.  With respect to any Remittance
      Date,  the  "Class I B-2 Floor  Amount"  will equal  $3,098,157.74  (which
      represents  approximately  2% of the Group I Cut-off  Date Pool  Principal
Balance);                                                           

           (xi) any Group I Monthly Excess Spread to fund any Group II Available
Funds Shortfall;                                                    

           (xii)  any  remaining  Group I  Monthly  Excess  Spread  to fund  any
      unfunded Accelerated  Principal Payment (as defined below) on the Group II
      Certificates  after giving effect to the distribution  described in clause
C(xi) or D(xi), as applicable, below;                               

           (xiii)  so  long  as the  Company  is  the  Servicer,  any  remaining
     available funds up to the Group I Monthly Servicing Fee, to the Servicer;

           (xiv) the amount of any reimbursement to CHI for Enhancement Payments
      with respect to the Class I B-2 Certificates as provided in the Agreement;

          (xv) so long as the Company is the Servicer,  any remaining  available
      funds up to the  amount of the Group II  Monthly  Servicing  Fee,  if any,
      remaining  unpaid after  giving  effect to the  distribution  described in
clause C(xiv) or D(xiv), as applicable, below, to the Servicer;     

          (xvi) the amount of any reimbursement to CHI for Enhancement  Payments
      with  respect  to  the  Class  II  B-4  Certificates  as  provided  in the
      Agreement,  which remains  unpaid after giving effect to the  distribution
described in clause C(xv) or D(xv), as applicable, below; and       

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          (xvii)  any  remaining  available  funds to the  holder of the Class R
Certificate.                                                        

      C. On each Remittance Date on which the Class II B Principal  Distribution
Test is not met, the Group II Available  Distribution Amount will be distributed
in the following amounts in the following order of priority:                    

          (i) interest  accrued during the related  Interest Period on the Class
      II A-1 Principal  Balance to the Class II A-1  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  A-1  Certificates  in  respect  of  prior
Remittance Dates;                                                   

          (ii) the Group II Formula Principal  Distribution  Amount,  net of any
      portion  of the  Overcollateralization  Reduction  Amount,  if  any,  then
      applicable to such  Certificates,  to the Class II A-1 Certificates  until
the Class II A-1 Principal Balance is reduced to zero;              

          (iii) interest accrued during the related Interest Period on the Class
      II B-1 Principal  Balance to the Class II B-1  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-1  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (iv) the remaining Group II Formula Principal Distribution Amount, if
      any,  to  the  Class  II B-1  Certificates,  net  of  any  portion  of the
      Overcollateralization  Reduction  Amount,  if any, then applicable to such
      Certificates, until the Class II B-1 Principal Balance is reduced to zero;

          (v) interest  accrued during the related  Interest Period on the Class
      II B-2 Principal  Balance to the Class II B-2  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-2  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (vi) the remaining Group II Formula Principal Distribution Amount, if
      any,  to  the  Class  II B-2  Certificates,  net  of  any  portion  of the
      Overcollateralization  Reduction  Amount,  if any, then applicable to such
      Certificates, until the Class II B-2 Principal Balance is reduced to zero;

          (vii) interest accrued during the related Interest Period on the Class
      II B-3 Principal  Balance to the Class II B-3  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-3  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (viii) the remainder of the Group II Formula  Principal  Distribution
      Amount,  to the  Class  II B-3  Certificates,  net of any  portion  of the
      Overcollateralization  Reduction  Amount,  if any, then applicable to such
      Certificates, until the Class II B-3 Principal Balance is reduced to zero;

           (ix) interest accrued during the related Interest Period on the Class
      II B-4 Principal  Balance to the Class II B-4  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-4  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (x) the remaining Group II Formula Principal  Distribution Amount, if
      any,  to  the  Class  II B-4  Certificates,  net  of  any  portion  of the
      Overcollateralization  Reduction  Amount,  if any, then applicable to such
      Certificates, until the Class II B-4 Principal Balance is reduced to zero;

           (xi) any remaining Group II Available Distribution Amount to fund any
Accelerated Principal Payment on the Group II Certificates;         

           (xii)  any  Group  II  Monthly  Excess  Spread,   together  with  any
      Overcollateralization  Reduction  Amount,  to fund any  Group I  Available
Funds Shortfall;                                                    

           (xiii) any remaining available funds up to the Class II A-1 Net Funds
      Cap Carryover Amount,  Class II B-1 Net Funds Cap Carryover Amount,  Class
      II B-2  Net  Funds  Cap  Carryover  Amount,  Class  II B-3 Net  Funds  Cap
      Carryover  Amount and Class II B-4 Net Funds Cap  Carryover  Amount to the
      applicable  Certificateholder;  if such available funds are not sufficient
      to distribute  the total Net Funds Cap Carryover  Amount to the applicable
      Classes  of   Certificates,   such  remaining   available  funds  will  be
      distributed on such Classes of  Certificates  pro rata based on the amount
      of the Net  Funds  Cap  Carryover  Amount  owing  to each  such  Class  of
Certificates;                                                       

          (xiv) so long as the Company is the Servicer,  any remaining available
      funds up to the  amount  equal to 1/12th of the  product  of 1.25% and the
      Group II Pool Scheduled  Principal  Balance for such  Remittance Date (the
"Group II Monthly Servicing Fee") to the Servicer;                  

           (xv) the amount of any reimbursement to CHI for Enhancement  Payments
      with  respect  to  the  Class  II  B-4  Certificates  as  provided  in the
Agreement;                                                          

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          (xvi) so long as the Company is the Servicer,  any remaining available
      funds up to the  amount  of the  Group I Monthly  Servicing  Fee,  if any,
      remaining  unpaid after  giving  effect to the  distribution  described in
clause A(xiii) or B(xiii), as applicable, above, to the Servicer;   

          (xvii) the amount of any reimbursement to CHI for Enhancement Payments
      with respect to the Class I B-2 Certificates as provided in the Agreement,
      which remains unpaid after giving effect to the distribution  described in
clause A(xiv) or B(xiv), as applicable, above; and                  

          (xviii)  any  remaining  available  funds to the holder of the Class R
Certificate.                                                        

      D. On each Remittance Date on which the Class II B Principal  Distribution
Test is met,  the  Available  Distribution  Amount  will be  distributed  in the
following amounts in the following order of priority:                           

          (i) interest  accrued during the related  Interest Period on the Class
      II A-1 Principal  Balance to the Class II A-1  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II A-1  Certificates,  in  respect  of  prior
Remittance Dates;                                                   

           (ii) the  Class II A  Percentage  of the Group II  Formula  Principal
      Distribution  Amount,  net of  any  portion  of the  Overcollateralization
      Reduction  Amount,  if any, then applicable to such  Certificates,  to the
      Class II A-1  Certificateholders  until the Class II A-1 Principal Balance
is reduced to zero;                                                 

          (iii) interest accrued during the related Interest Period on the Class
      II B-1 Principal  Balance to the Class II B-1  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-1  Certificates  in  respect  of  prior
Remittance Dates;                                                   

          (iv) the  Class II B  Percentage  of the  Group II  Formula  Principal
      Distribution  Amount to the Class II B-1 Certificates,  net of any portion
      of the Overcollateralization  Reduction Amount, if any, then applicable to
      such Certificates,  until the Class II B-1 Principal Balance is reduced to
zero;                                                               

          (v) interest  accrued during the related  Interest Period on the Class
      II B-2 Principal  Balance to the Class II B-2  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-2  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (vi) the remainder of the Class II B Percentage, if any, of the Group
      II Formula Principal Distribution Amount to the Class II B-2 Certificates,
      net of any portion of the Overcollateralization  Reduction Amount, if any,
      then  applicable  to such  Certificates,  until the Class II B-2 Principal
Balance is reduced to zero;                                         

          (vii) interest accrued during the related Interest Period on the Class
      II B-3 Principal  Balance to the Class II B-3  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-3  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (viii) the  remainder  of the Class II B  Percentage,  if any, of the
      Group II Formula  Principal  Distribution  Amount, if any, to the Class II
      B-3  Certificates,   net  of  any  portion  of  the  Overcollateralization
      Reduction Amount, if any, then applicable to such Certificates,  until the
Class II B-3 Principal Balance is reduced to zero;                  

          (ix) interest  accrued during the related Interest Period on the Class
      II B-4 Principal  Balance to the Class II B-4  Certificates at the related
      Remittance Rate, together with any previously  undistributed shortfalls in
      interest  due on the  Class  II  B-4  Certificates  in  respect  of  prior
Remittance Dates;                                                   

           (x) the  remainder  of the Group II  Formula  Principal  Distribution
      Amount  to the  Class  II B-4  Certificates,  net  of any  portion  of the
      Overcollateralization  Reduction  Amount,  if any, then applicable to such
      Certificates, until the Class II B-4 Principal Balance is reduced to zero;
      provided,  however,  if the Class II A-1  Principal  Balance  has not been
      reduced  to zero on or  before  a  Remittance  Date,  to the  extent  that
      allocations in respect of principal to the Class II B-4 Certificates would
      reduce  the  sum  of  the  Class  II  B-4   Principal   Balance   and  the
      Overcollateralization  Amount below the Group II Certificate Floor Amount,
      then the amount of such excess  principal  will instead be  distributed to
      the Class II A-1  Certificates.  With respect to any Remittance  Date, the
      "Group II  Certificate  Floor  Amount"  will  equal  $2,645,378.00  (which
      represents  approximately  2% of  the  Group  II  Cut-off  Date  Principal
Balance);                                                           

           (xi) any remaining Group II Available Distribution Amount to fund any
Accelerated Principal Payment on the Group II Certificates;         

           (xii)  any  Group  II  Monthly  Excess  Spread,   together  with  any
      Overcollateralization  Reduction  Amount,  to fund any  Group I  Available
Funds Shortfall;                                                    

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          (xiii) any remaining  available funds up to the Class II A-1 Net Funds
      Cap Carryover Amount,  Class II B-1 Net Funds Cap Carryover Amount,  Class
      II B-2  Net  Funds  Cap  Carryover  Amount,  Class  II B-3 Net  Funds  Cap
      Carryover  Amount  and  Class II B-4 Net  Funds  Carryover  Amount  to the
      applicable  Certificateholder;  if such available funds are not sufficient
      to distribute  the total Net Funds Cap Carryover  Amount to the applicable
      Classes  of   Certificates,   such  remaining   available  funds  will  be
      distributed on such Classes of  Certificates  pro rata based on the amount
      of the Net  Funds  Cap  Carryover  Amount  owing  to each  such  Class  of
Certificates;                                                       

           (xiv) so long as the Company is the Servicer, any remaining available
funds up to the Group II Monthly Servicing Fee, to the Servicer;    

           (xv) the amount of any reimbursement to CHI for Enhancement  Payments
      with  respect  to  the  Class  II  B-4  Certificates  as  provided  in the
Agreement;                                                          

          (xvi) so long as the Company is the Servicer,  any remaining available
      funds up to the  amount  of the  Group I Monthly  Servicing  Fee,  if any,
      remaining  unpaid after  giving  effect to the  distribution  described in
clause A(xiii) or B(xiii), as applicable, above, to the Servicer;   

          (xvii) the amount of any reimbursement to CHI for Enhancement Payments
      with respect to the Class I B-2 Certificates as provided in the Agreement,
      which remains unpaid after giving effect to the distribution  described in
clause A(xiv) or B(xiv), as applicable, above; and                  

          (xviii)  any  remaining  available  funds to the holder of the Class R
Certificate.                                                        

      In no event will the aggregate  distributions of principal to any Class of
Certificates  (including,  in the  case  of  the  Class  IB-2  and  Class  IIB-4
Certificates, any principal amounts included in any Enhancement Payments) exceed
the Original Principal Balance of such Class of Certificates.                   

      Notwithstanding  the  prioritization  of the  distribution  of the Group I
Formula  Principal  Distribution  Amount  among the Group I Senior  Certificates
pursuant to clauses A(ii) and B(ii) above,  on each Remittance Date on and after
the Remittance Date, if any, on which the Deficiency  Event occurs,  the Group I
Available  Distribution  Amount  remaining  after  making the  distributions  of
interest to the Group I Senior  Certificates  required by clauses  A(i) and B(i)
above will be applied to distribute  the Group IFormula  Principal  Distribution
Amount on each Class of Group I Senior  Certificates pro rata in accordance with
the outstanding  Principal  Balance of such Class.  The "Deficiency  Event" will
occur if the sum of the  Principal  Balances of the Group I Senior  Certificates
becomes equal to or greater than the Pool Scheduled  Principal Balance for Group
I.                                                                              

Definitions:                                                                    

      The  "Class I M-1 and  Class I B  Principal  Distribution  Test" is met in
respect of a  Remittance  Date on which each of the  following  requirements  is
satisfied:                                                                      

          (i) such  Remittance  Date is on or after the December 2004 Remittance
Date;                                                               

           (ii) the Class I M-1  Percentage  plus the Class I B  Percentage  for
      such  Remittance Date is equal to at least 25.38% (which is 1.75 times the
      sum of the original  Class I M-1  Percentage  and the  original  Class I B
Percentage);                                                        

(iii) the Group I Performance Tests are satisfied; and    

          (iv) the Class I B-2  Principal  Balance  is not less than the Class I
B-2 Floor Amount.                                                   

      The  "Class  II B  Principal  Distribution  Test" is met in  respect  of a
Remittance Date on which each of the following requirements is satisfied:       

           (i) such  Remittance Date is on or after the December 2004 Remittance
Date;                                                     

          (ii) the Class II B Percentage for such Remittance Date is equal to at
least 50%;                                                          

(iii) the Group II Performance Tests are satisfied; and     

           (iv)  the  sum  of  the  Class  II  B-4  Principal  Balance  and  the
      Overcollateralization  Amount is not less  than the  Group II  Certificate
Floor Amount.                                                       

      The "Group I  Performance  Tests" are satisfied in respect of a Remittance
Date if all of the following conditions with respect to Group I are met:        

          (i)  the  Average  Sixty-Day  Delinquency  Ratio  (as  defined  in the
      Agreement) as of such  Remittance  Date does not exceed 5% for the Group I
Contracts;                                                          

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          (ii) the  Average  Thirty-Day  Delinquency  Ratio (as  defined  in the
      Agreement) as of such  Remittance  Date does not exceed 7% for the Group I
Contracts;                                                          

           (iii) the  Cumulative  Realized  Losses (as defined in the Agreement)
      for the  Group I  Contracts  as of such  Remittance  Date do not  exceed a
      certain  specified  percentage  of the  Group  I  Cut-off  Date  Principal
    Balance, depending on the year in which such Remittance Date occurs; and

          (iv) the Current  Realized Loss Ratio (as defined in the Agreement) as
      of such Remittance  Date does not exceed 2.75% for Group I Contracts.  The
      "Group II Performance Tests" are satisfied in respect of a Remittance Date
      if all of the following  conditions with respect to the Group II Contracts
are met:                                                            

          (i)  the  Average  Sixty-Day  Delinquency  Ratio  (as  defined  in the
      Agreement) as of such  Remittance Date does not exceed 5% for the Group II
Contracts;                                                          

          (ii) the  Average  Thirty-Day  Delinquency  Ratio (as  defined  in the
      Agreement) as of such  Remittance Date does not exceed 7% for the Group II
Contracts;                                                          

           (iii) the  Cumulative  Realized  Losses (as defined in the Agreement)
      for the Group II  Contracts  as of such  Remittance  Date do not  exceed a
      certain  specified  percentage of the Group II Cut-off Date,  depending on
the year in which such Remittance Date occurs; and                  

           (iv) the Current Realized Loss Ratio (as defined in the Agreement) as
      of such  Remittance Date does not exceed 2.75% for the Group II Contracts.

      The "Group I Monthly Excess  Spread" with respect to any  Remittance  Date
will  generally  be equal to the  excess  interest  collections  on the  Group I
Contracts for the related Due Period which remain available after payment of all
required  distributions  on the Group I Certificates  and certain other required
payments for such Remittance Date as specified in the Agreement.                

      The "Group II Monthly Excess  Spread" with respect to any Remittance  Date
will  generally  be equal to the  excess  interest  collections  on the Group II
Contracts   for  the  related  Due  Period   (together   with  interest  on  the
Overcollateralization  Amount to the extent  provided  in the  Agreement)  which
remain  available  after payment of all required  distributions  on the Group II
Certificates  (including any Accelerated  Principal  Payment for such Remittance
Date) and certain other required  payment for such  Remittance Date as specified
in the Agreement.                                                               

      The "Group I  Available  Funds  Shortfall",  if any,  with  respect to any
Remittance  Date,  will be equal to the  amount,  if any,  by which  the Group I
Available Distribution Amount is less than the amount required to be distributed
to the Group I  Certificates  on such  Remittance  Date pursuant to clauses A(i)
through (x) or clauses B(i) through (x), as the case may be, of the distribution
priorities set forth above.                                                     

      The "Group II  Available  Funds  Shortfall",  if any,  with respect to any
Remittance  Date,  will be equal to the  amount,  if any,  by which the Group II
Available Distribution Amount is less than the amount required to be distributed
to the Group II  Certificates  on such  Remittance Date Pursuant to clauses C(i)
through (x) or clauses D(i) through (x), as the case may be, of the distribution
priorities set forth above.                                                     

      The  "Principal  Balance" of each Class of  Certificates  is its  original
Principal  Balance  reduced  by all  distributions  on such  Class in respect of
principal.  The  "Class I A  Principal  Balance"  is the sum of the Class I A-1,
Class I A-2,  Class I A-3, Class I A-4 and Class I A-5 Principal  Balances.  The
"Class I B Principal  Balance" is the sum of the Class I B-1  Principal  Balance
and the Class I B-2 Principal Balance. The "Class II B Principal Balance" is the
sum of the Class II B-1 Principal  Balance,  the Class II B-2 Principal Balance,
the Class II B-3 Principal Balance and the Class II B-4 Principal Balance.      

      The "Class I A Percentage" for a Remittance Date is the percentage derived
from the fraction (which shall not be greater than 1), the numerator of which is
the aggregate Principal Balance of the Class I A Certificates  immediately prior
to such  Remittance  Date and the  denominator  of  which is the Pool  Scheduled
Principal Balance for Group I Contracts.                                        

      The  "Class I M-1  Percentage"  for a  Remittance  Date is the  percentage
derived from the fraction  (which shall not be greater than 1), the numerator of
which  is the  aggregate  Principal  Balance  of the  Class  I M-1  Certificates
immediately  prior to such  Remittance  Date and the denominator of which is the
Pool Scheduled Principal Balance for the Group I Contracts.                     

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      The "Class I B Percentage" is 100% less the Class I A Percentage and Class
I M-1 Percentage.                                                               

      The  "Class  II A  Percentage"  for a  Remittance  Date is the  percentage
derived from the fraction  (which shall not be greater than 1), the numerator of
which is the  aggregate  Principal  Balance  of the  Class  II A-1  Certificates
immediately  prior to such  Remittance  Date and the denominator of which is the
Pool Scheduled Principal Balance for Group II Contracts.                        

      The  "Class  II B  Percentage"  is 100%  less the  Class II A  Percentage;
provided,  however,  that on any  Remittance  Date on which  (i) the  Class II B
Principal Distribution Test is met and (ii) the Class II B Percentage is greater
than  50%,  the  Class II A  Percentage  shall  equal 0% until  distribution  of
principal to the Class II B  Certificateholders  on such  Remittance  Date shall
reduce  the  Class II B  Percentage  to a  percentage  equal  to 50%;  provided,
further,  on the Remittance Date on which there is a Group II Formula  Principal
Distribution  Amount in excess of the amount (the "Required Class II B Payment")
required to be distributed  to the Class II B  Certificates  so as to reduce the
Class  II B  Percentage  to 50%,  the  Required  Class  II B  Payment  shall  be
distributed  to the Class II B Certificates  and the remaining  Group II Formula
Principal  Distribution  Amount shall be distributed  pro rata to the Class II A
Certificates and the Class II B Certificates.                                   

      The "Average  Sixty-Day  Delinquency  Ratio" and the  "Average  Thirty-Day
Delinquency  Ratio" are, in general,  the ratios of the average of the aggregate
principal  balances of Contracts in the applicable  Group  delinquent 60 days or
more and 30 days or more,  respectively,  for the  preceding  three Due  Periods
(determined  as of the last day of each such Due  Period)  to the  average  Pool
Scheduled Principal Balance for such periods.  "Cumulative Realized Losses" are,
in general, the aggregate net liquidation losses (calculated as specified in the
Agreement)  in respect of  Liquidated  Contracts  since the  Cut-off  Date.  The
"Current  Realized  Loss Ratio" is, in general,  the ratio of the  aggregate net
liquidation losses in respect of Liquidated  Contracts for the periods specified
in the Agreement to an average Pool Scheduled Principal Balance specified in the
Agreement.                                                                      

      The  "Formula  Principal  Distribution  Amount" in respect of a Remittance
Date and a Group equals the sum of (i) all  scheduled  payments of principal due
on each  outstanding  Contract in such Group during the Due Period preceding the
month in which the Remittance Date occurs,  (ii) the Scheduled Principal Balance
(as defined  below) of each Contract in such Group which,  during the Due Period
preceding  the month of such  Remittance  Date,  was  purchased  by the  Company
pursuant to the Agreement on account of certain breaches of its  representations
and warranties,  (iii) all Partial  Prepayments (as defined in the Agreement) of
Contracts in such Group  received  during such  preceding  Due Period,  (iv) the
Scheduled  Principal  Balance of each Contract in such Group that was prepaid in
full during such preceding Due Period,  (v) the Scheduled  Principal  Balance of
each  Contract  in such Group that  became a  Liquidated  Contract  during  such
preceding  Due Period and (vi) any  previously  undistributed  shortfalls in the
amounts in clauses  (i)  through  (v) in respect of the prior  Remittance  Dates
(other than any such shortfall with respect to which an Enhancement  Payment has
been made to the related Certificateholders).                                   

      The "Class II A-1 Net Funds Cap Carryover Amount" means, on any Remittance
Date, the sum of (A) if on such  Remittance  Date,  the Remittance  Rate for the
Class II A-1 Certificates is based upon the Net Funds Cap, the excess of (i) the
lesser of (a) the product of (i) the Weighted  Average  Lifetime Cap (as defined
herein)  and (ii) the Class II A-1  Certificate  Principal  Balance  and (b) the
amount of interest the Class II A-1 Certificates  would otherwise be entitled to
receive on such  Remittance  Date had such rate been  calculated at the Class II
A-1  Formula  Rate for such  Remittance  Date over (ii) the  amount of  interest
payable  on the  Class  II A-1  Certificates  at the  Net  Funds  Cap  for  such
Remittance  Date  and (B) the  Class  II A-1 Net  Funds  Cap  Carryover  Amount,
together with accrued interest  thereon,  for all previous  Remittance Dates not
previously  paid  pursuant to clause  C(xiii) or D(xiii)  above.  The  "Weighted
Average  Lifetime Cap" with respect to any Remittance  Date shall equal, on such
Remittance  Date,  the  weighted  average of the  Lifetime  Caps of the Group II
Contracts  multiplied  by a fraction the numerator of which is the actual number
of days elapsed in the related  Interest  Period and the denominator of which is
360.                                                                            

      The "Class II B-1 Net Funds Cap Carryover Amount" means, on any Remittance
Date, the sum of (A) if on such  Remittance  Date,  the Remittance  Rate for the
Class II B-1 Certificates is based upon the Net Funds Cap, the excess of (i) the
lesser of (a) the product of (i) the Weighted  Average Lifetime Cap and (ii) the
Class II B-1  Certificate  Principal  Balance and (b) the amount of interest the
Class II B-1  Certificates  would  otherwise  be  entitled  to  receive  on such
Remittance  Date had such rate been  calculated at the Class II B-1 Formula Rate
for such Remittance  Date over (ii) the amount of interest  payable on the Class
II B-1  Certificates  at the Net Funds Cap for such  Remittance Date and (B) the
Class II B-1 Net Funds Cap  Carryover  Amount,  together  with accrued  interest
thereon,  for all previous  Remittance  Dates not  previously  paid  pursuant to
clause C(xiii) or D(xiii) above.                                                

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      The "Class II B-2 Net Funds Cap Carryover Amount" means, on any Remittance
Date, the sum of (A) if on such  Remittance  Date,  the Remittance  Rate for the
Class II B-2 Certificates is based upon the Net Funds Cap, the excess of (i) the
lesser of (a) the product of (i) the Weighted  Average Lifetime Cap and (ii) the
Class II B-2  Certificate  Principal  Balance and (b) the amount of interest the
Class II B-2  Certificates  would  otherwise  be  entitled  to  receive  on such
Remittance  Date had such rate been  calculated at the Class II B-2 Formula Rate
for such Remittance  Date over (ii) the amount of interest  payable on the Class
II B-2  Certificates  at the Net Funds Cap for such  Remittance Date and (B) the
Class II B-2 Net Funds Cap  Carryover  Amount,  together  with accrued  interest
thereon,  for all previous  Remittance  Dates not  previously  paid  pursuant to
clause C(xiii) or D(xiii) above.                                                

      The "Class II B-3 Net Funds Cap Carryover Amount" means, on any Remittance
Date, the sum of (A) if on such  Remittance  Date,  the Remittance  Rate for the
Class II B-3 Certificates is based upon the Net Funds Cap, the excess of (i) the
lesser of (a) the product of (i) the Weighted  Average Lifetime Cap and (ii) the
Class II B-3  Certificate  Principal  Balance and (b) the amount of interest the
Class II B-3  Certificates  would  otherwise  be  entitled  to  receive  on such
Remittance  Date had such rate been  calculated at the Class II B-3 Formula Rate
for such Remittance  Date over (ii) the amount of interest  payable on the Class
II B-3  Certificates  at the Net Funds Cap for such  Remittance Date and (B) the
Class II B-3 Net Funds Cap  Carryover  Amount,  together  with accrued  interest
thereon,  for all previous  Remittance  Dates not  previously  paid  pursuant to
clause C(xiii) or D(xiii) above.                                                

      The "Class II B-4 Net Funds Cap Carryover Amount" means, on any Remittance
Date, the sum of (A) if on such  Remittance  Date,  the Remittance  Rate for the
Class II B-4 Certificates is based upon the Net Funds Cap, the excess of (i) the
lesser of (a) the product of (i) the Weighted  Average Lifetime Cap and (ii) the
Class II B-4  Certificate  Principal  Balance and (b) the amount of interest the
Class II B-4  Certificates  would  otherwise  be  entitled  to  receive  on such
Remittance  Date had such rate been  calculated at the Class II B-4 Formula Rate
for such Remittance  Date over (ii) the amount of interest  payable on the Class
II B-4  Certificates  at the Net Funds Cap for such  Remittance Date and (B) the
Class II B-4 Net Funds Cap  Carryover  Amount,  together  with accrued  interest
thereon,  for all previous  Remittance  Dates not  previously  paid  pursuant to
clause C(xiii) or D(xiii) above.                                                

      The "Net Funds Cap  Carryover  Amount" with respect to each Class of Group
II  Certificates  shall  equal each of the Class II A-1 Net Funds Cap  Carryover
Amount,  Class II B-1 Net Funds Cap Carryover Amount, Class II B-2 Net Funds Cap
Carryover  Amount,  Class II B-3 Net Funds Cap Carryover Amount and Class II B-4
Net Funds Cap  Carryover  Amount,  as  applicable.  The "Net Funds Cap Carryover
Amount" with respect to all Classes of Group II Certificates shall equal the sum
of the Class II A-1 Net Funds Cap Carryover  Amount,  the Class II B-1 Net Funds
Cap Carryover Amount, the Class II B-2 Net Funds Cap Carryover Amount, the Class
II B-3 Net  Funds  Cap  Carryover  Amount  and the  Class II B-4 Net  Funds  Cap
Carryover Amount. The Class II B-4 Net Funds Cap Carryover Amount shall not have
the benefit of the Limited Guarantee or the Alternate Credit Enhancement.       

      The "Scheduled  Principal Balance" of a Contract as of any Remittance Date
is its  principal  balance  (before  any  adjustment  by reason  of  bankruptcy,
moratorium  or  similar  waiver or grace  period)  as of the Due Date (or latest
occurring  Due Date,  in the case of a Bi-weekly  Contract  or any  Semi-Monthly
Contract) in the Due Period next preceding such  Remittance  Date,  after giving
effect  to any  previous  Partial  Prepayments  and after  giving  effect to all
previous scheduled  principal payments and to the scheduled payment of principal
due on such Due Date (whether or not paid and before any adjustment by reason of
bankruptcy, moratorium or similar waiver or grace period).                      

      The "Pool  Scheduled  Principal  Balance"  for a Group (the  "Group I Pool
Scheduled  Principal Balance" or the "Group IIPool Scheduled  Principal Balance"
as  applicable)  for any  Remittance  Date is equal to (i) the Cut-off Date Pool
Principal  Balance  for such  Group  less  (ii)  the  aggregate  of the  Formula
Principal  Distribution  Amounts  for such Group  (exclusive  of the  amounts in
clause (vi) of the definition thereof) for all prior Remittance Dates.          

      A  "Liquidated  Contract" is a defaulted  Contract as to which all amounts
that the  Servicer  expects to recover  through the date of  disposition  of the
Manufactured  Home and/or any real  property  securing  such  Contract have been
received.                                                                       

Group II Certificates; Overcollateralization Provisions                         

      The Group II Weighted  Average Contract Rate for the Group II Contracts is
expected  generally  to be higher than the  weighted  average of the  Remittance
Rates  applicable to the Group II Certificates,  thus generating  certain excess
interest collections which in the absence of losses and delinquencies,  will not
be needed to fund  distributions  on the Group II  Certificates.  The  Agreement
provides that this excess interest is to be applied, to the extent available,   

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to make  accelerated  payments of  principal to the Class or Classes of Group II
Certificates  then  entitled  to  receive   distributions  of  principal.   Such
accelerated  payments are expected to cause the aggregate  Principal  Balance of
the Group II Certificates to amortize more rapidly than the principal balance of
the Group II Contracts,  resulting in "overcollateralization"  (i.e., the excess
of the Group II Pool Scheduled  Principal  Balance over the aggregate  Principal
Balance of the Group II Certificates).  This interest for a Due Period, together
with  interest  on the  Overcollateralization  Amount  itself,  remaining  after
distributions  in clauses  C(i)  through  (xi) or D(i) through (xi) above is the
"Group II Monthly Excess Spread" for the Remittance Date  immediately  following
the applicable Due Period.  On any Remittance  Date, the  "Overcollateralization
Amount" will be an amount equal to the excess,  if any, of (x) the Group II Pool
Scheduled  Principal  Balance  as of the end of the  immediately  preceding  Due
Period  over (y) the  aggregate  Certificate  Principal  Balance of the Group II
Certificates  on such  Remittance  Date  (after  taking  into  account all other
distributions  to be made on such  Remittance  Date).  On the Closing Date,  the
Overcollateralization Amount will be $899.79.                                   

      On each  Remittance  Date,  the  Group II  Available  Distribution  Amount
remaining  after  distributions  in clauses C(i) through (x) or D(i) through (x)
will be applied to make  accelerated  payments of principal  on each  Remittance
Date until the  Overcollateralization  Amount is equal to the "Initial  Required
Overcollateralization  Amount," which is expected to equal $4,629,411.49,  which
represents  approximately  3.50% of the initial  Group II Contract Pool Balance.
Thereafter,  any remaining  Group II Available  Distribution  Amount will not be
applied to further  increase the  Overcollateralization  Amount  unless,  due to
losses,  the  Overcollateralization  Amount is  decreased,  in which  event such
applications  will  commence  to the extent  necessary  to  increase  the actual
Overcollateralization Amount to the Required  Overcollateralization  Amount. The
level  of the  Required  Overcollateralization  Amount  is  equal  to,  for  any
Remittance  Date,  (x)  prior  to the  date on which  the  Class II B  Principal
Distribution Test is first satisfied, the Initial Required Overcollateralization
Amount  and (y) on and  after  the  date  on  which  the  Class  II B  Principal
Distribution  Test is first  satisfied,  the lesser of (i) the Initial  Required
Overcollateralization  Amount  and (ii)  the  greater  of (a)  7.00% of the then
current Group II Pool Scheduled  Principal Balance and (b) 0.75% of the Group II
Cut-off Date Pool Principal Balance.                                            

      If, on any Remittance  Date,  the level of Required  Overcollateralization
Amount is permitted  to be reduced,  the "Excess  Overcollateralization  Amount"
(the excess of (x) the actual  Overcollateralization  Amount on such  Remittance
Date (after taking into account all other distributions on such Remittance Date)
over (y) the Required  Overcollateralization  Amount for such  Remittance  Date)
will be deducted from the Group II Formula  Principal  Distribution  Amount (but
only to the  extent of such  Group II  Formula  Principal  Distribution  Amount)
otherwise  distributable  to the  holders of the Group II  Certificates  on such
Remittance  Date  (any  such  amount  so  deducted,  an   "Overcollateralization
Reduction  Amount") and will be applied as provided herein under "Description of
the Certificates--Distributions". The Overcollateralization Reduction Amount, if
any, on any  Remittance  Date shall be funded,  first,  from that portion of the
Group II Formula Principal  Distribution  Amount otherwise  distributable to the
holders of the most junior  class of Group II  Certificates  on such  Remittance
Date,   and,   if  such   amount   is   insufficient   to   fund  in  full   the
Overcollateralization  Reduction Amount on such Remittance  Date, then,  second,
from  that  portion  of the  Group  II  Formula  Principal  Distribution  Amount
otherwise  distributable  to the  holders of each  succeeding  class of Group II
Certificates in ascending order of seniority,  until such  Overcollateralization
Reduction Amount is completely  funded.  The Agreement provides that in no event
shall an  Overcollateralization  Reduction  Amount be deducted from the Group II
Formula Principal  Distribution  Amount if, after deducting such amount, the sum
of the  aggregate  Principal  Balance of the Class II B-4  Certificates  and the
Overcollateralization  Amount,  taken  together,  would be less than 2.0% of the
Group II Cut-off Date Principal Balance.                                        

      The  amount,  if  any,  actually  applied  as an  accelerated  payment  of
principal  on any  Remittance  Date is  referred  to herein as the  "Accelerated
Principal Payment" for such Remittance Date. The Accelerated  Principal Payment,
if any, on any Remittance  Date will be an amount equal to the lesser of (x) the
excess of (i) the  Required  Overcollateralization  Amount  over (ii) the actual
Overcollateralization  Amount  on such  Remittance  Date  and (y) the  Group  II
Available  Distribution  Amount  remaining after  distributions  in clauses C(i)
through (x) or D(i)  through (x) and the Group I Available  Distribution  Amount
remaining  after  distributions  in clauses  A(i)  through (xi) and B(i) through
(xi). The  Accelerated  Principal  Payment will be distributed to the holders of
the Class of Group II  Certificates  then entitled to receive  distributions  in
respect of principal on such date.                                              

Cross Collateralization Provisions                                              

      The Agreement provides for cross collateralization through the application
of  excess  amounts  generated  by one  Contract  Group  to fund  shortfalls  in
available  funds  in  the  other  Contract  Group,   subject  to  certain  prior
requirements of such Contract Group.  Therefore,  as to any Remittance Date, the
amount,  if any, of Group I Monthly Excess Spread                               

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remaining after payment of all then applicable  prior  requirements  relating to
the Group I  Certificates  will be used to fund,  first,  any Group II Available
Funds  Shortfall  and,  second,  to the extent of any remaining  Group I Monthly
Excess  Spread,  any  unfunded  Accelerated  Principal  Payment  on the Group II
Certificates for such Remittance Date. Likewise,  as to any Remittance Date, the
amount,   if  any,  of  Group  II  Monthly  Excess  Spread  (together  with  any
Overcollateralization  Reduction  Amount)  remaining  after  payment of all then
applicable prior requirements  relating to the Group II Certificates  (including
any Accelerated Principal Payment for such Remittance Date) will be used to fund
any Group I Available Funds  Shortfall for such Remittance  Date. The payment of
any amounts in respect of cross  collateralization  will be applied in the order
specified   above  under   "--Distributions"   and  "--Group  II   Certificates;
Overcollateralization Provisions".                                              

      Additional  funds  resulting from the  cross-collateralization  provisions
described  herein shall not be available to Group II  Certificateholders  to pay
the Net Funds Cap Carryover Amount.                                             

Group I Certificates and the Senior/Subordinate Structure                       

Subordination of the Class I A-5 Certificates                       

      The  rights of the  holders  of the Class I A-5  Certificates  to  receive
distributions   of  amounts   collected  on  the  Group  I  Contracts   will  be
subordinated,  to the extent  described  herein,  to such  rights of the Group I
Senior Certificates. This subordination is intended to enhance the likelihood of
receipt by the holders of the Group I Senior  Certificates of the full amount of
their scheduled  monthly  payments of interest and the ultimate  receipt by such
holders of principal equal to the applicable Original Class Principal Balance of
the Group I Senior Certificates.                                                

      The protection afforded to the Group I Senior Certificates by means of the
subordination  of the  Class  I A-5  Certificates  will be  accomplished  by the
application of the Group I Available  Distribution Amount in the order specified
under   "--Distributions"   above.  In  addition,   if  the  Group  I  Available
Distribution  Amount on any  Remittance  Date is not  sufficient  to permit  the
distribution of the entire  specified  portion of the Group I Formula  Principal
Distribution Amount to the Group I Senior Certificateholders,  the subordination
feature will protect the Group I Senior Certificateholders, by the right of such
Certificateholders   to  receive,   until,   if  ever,  any  such  shortfall  is
distributed,  a  portion  of the  future  distributions  of  Group  I  Available
Distribution Amounts that would otherwise have been distributable to the holders
of the Class I A-5 Certificates.                                                

Subordination of the Class I M-1 Certificates                       

      The  rights  of  holders  of  the  Class  I M-1  Certificates  to  receive
distributions   of  amounts   collected  on  the  Group  I  Contracts   will  be
subordinated,  to the extent described  herein, to such rights of the holders of
the Group I Senior Certificates and Class I A-5 Certificates. This subordination
is intended to enhance the  likelihood  of receipt by the holders of the Group I
Senior  Certificates  and Class I A-5  Certificates  of the full amount of their
scheduled  monthly payments of interest and the ultimate receipt by such holders
of principal  equal to the applicable  Original Class  Principal  Balance of the
Group I Senior Certificates and Class I A-5 Certificates.                       

      The protection  afforded to the holders of the Group I Senior Certificates
and  Class I A-5  Certificates  by means  of the  subordination,  to the  extent
provided herein, of the Class I M-1 Certificates will be accomplished (i) by the
application of the Group I Available  Distribution Amount in the order specified
under  "--Distributions"  above and (ii) if the Group I  Available  Distribution
Amount on such Remittance  Date is not sufficient to permit the  distribution of
the  entire  specified  portion  of the Group I Formula  Principal  Distribution
Amount,  as applicable,  to the Class of Group I Senior  Certificateholders  and
Class I A-5 Certificateholders,  by the right of such Group I Senior and Class I
A-5  Certificateholders  to  receive,  until,  if ever,  any such  shortfall  is
distributed,  a portion  of future  Available  Distribution  Amounts  that would
otherwise have been payable to the holders of the Class I M-1  Certificates.  On
each Remittance Date before the Class I A Principal  Balance is reduced to zero,
the holders of the Class I M-1 Certificates  will receive the amounts  specified
under "--Distributions" above.                                                  

      Subordination  of the Class I B-1 and Class I B-2 Certificates and Class R
Certificate                                                                     

      The rights of holders of the Class I B-1 and Class I B-2  Certificates and
Class R Certificate to receive distributions of amounts collected on the Group I
Contracts will be subordinated,  to the extent described  herein, to such rights
of the holders of the Class I M-1 Certificates.  This  subordination is intended
to enhance the likelihood of receipt by the holders of the Class I A and Class I
M-1  Certificates  of the full  amount of their  scheduled  monthly  payments of
interest  and the ultimate  receipt by such  holders of  principal  equal to the
applicable Original Class Principal Balance.                                    

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      The protection  afforded to the holders of the Class I M-1 Certificates by
means of the  subordination,  to the extent provided herein,  of the Class I B-1
and Class I B-2 Certificates and Class R Certificate will be accomplished (i) by
the  application  of the  Group I  Available  Distribution  Amount  in the order
specified  under  "--Distributions"  above  and  (ii) if the  Group I  Available
Distribution  Amount on such  Remittance  Date is not  sufficient  to permit the
distribution of the entire  specified  portion of the Group I Formula  Principal
Distribution Amount, as applicable,  to the Class I M-1  Certificateholder  then
entitled   to  such   distribution,   by  the   right   of  such   Class  I  M-1
Certificateholders   to  receive,   until,   if  ever,  any  such  shortfall  is
distributed,  a portion  of future  Available  Distribution  Amounts  that would
otherwise  have been  payable to the  holders of the Class I B-1 and Class I B-2
Certificates  or the Class R  Certificate.  On each  Remittance  Date before the
Class I A  Principal  Balance is reduced to zero,  the  holders of the Class I B
Certificates will receive the amounts specified under "--Distributions" above.  

Subordination of the Class I B-2 Certificates                       

      The  rights of the  holders  of the Class I B-2  Certificates  to  receive
distributions  of amounts  collected on the  Contracts in the Trust Fund will be
subordinated,  to the extent described herein, to such rights of the Class I B-1
Certificates.  This  subordination  is  intended to enhance  the  likelihood  of
receipt  by  the  holders  of  the  Class  I A,  Class  I M-1  and  Class  I B-1
Certificates of the full amount of their scheduled  monthly payments of interest
and the ultimate  receipt by such holders of principal  equal to the  applicable
Original Class Principal Balance.                                               

      The protection  afforded to the Class I B-1  Certificates  by means of the
subordination  of the  Class  I B-2  Certificates  will be  accomplished  by the
application  of the  applicable  Available  Distribution  Amount  in  the  order
specified  under  "--Distributions"   above.  In  addition,  if  the  applicable
Available Distribution Amount on any Remittance Date is not sufficient to permit
the  distribution  of  the  entire  specified  portion  of the  related  Formula
Principal   Distribution   Amount,   as   applicable,   to  the   Class   I  B-1
Certificateholders   and  the   subordination   provided  by  the  Class  I  B-2
Certificates has not been exhausted,  the subordination feature will protect the
Class   I  B-1   Certificateholders   by  the   right   of  the   Class   I  B-1
Certificateholders   to  receive,   until,   if  ever,  any  such  shortfall  is
distributed,  a portion of the future  distributions  of Available  Distribution
Amounts that would otherwise have been distributable to the holders of the Class
I B-2 Certificates or the Class R Certificate.                                  

      However, the Class I B-2 Certificates will have the benefit of the Limited
Guarantee  from CHI or the  Alternate  Credit  Enhancement.  Neither the Limited
Guarantee nor the  Alternate  Credit  Enhancement  will benefit or result in any
payments  on any  other  Offered  Certificates  (other  than  the  Class  II B-4
Certificates to the limited extent described below).                            

Group II Certificates and the Senior/Subordinate Structure                      

Subordination of the Class II B-1 Certificates                      

      The  rights of the  holders  of the Class II B-1  Certificates  to receive
distributions  of amounts  collected on the  Contracts in the Trust Fund will be
subordinated, to the extent described herein, to such rights of the Class II A-1
Certificates.  This  subordination  is  intended to enhance  the  likelihood  of
receipt by the  holders of the Class II A-1  Certificates  of the full amount of
their scheduled  monthly  payments of interest and the ultimate  receipt by such
holders of principal equal to the Original Class II A-1 Class Principal Balance.

      The protection  afforded to the Class II A-1  Certificates by means of the
subordination  of the  Class II B-1  Certificates  will be  accomplished  by the
application  of the  applicable  Available  Distribution  Amount  in  the  order
specified  under  "--Distributions"   above.  In  addition,  if  the  applicable
Available Distribution Amount on any Remittance Date is not sufficient to permit
the  distribution  of the  entire  specified  portion  of the  Group II  Formula
Principal   Distribution   Amount,   as   applicable,   to  the   Class  II  A-1
Certificateholders,  the  subordination  feature  will  protect the Class II A-1
Certificateholders,  by the right of such  Certificateholders to receive, until,
if  ever,  any  such  shortfall  is   distributed,   a  portion  of  the  future
distributions of Available  Distribution  Amounts that would otherwise have been
distributable to the Class II B-1 Certificates.                                 

      Subordination  of the  Class  II B-2,  Class  II  B-3,  and  Class  II B-4
Certificates and Class R Certificate                                            

      The rights of holders of the Class II B-2,  Class II B-3, Class II B-4 and
Class R  Certificate  to  receive  distributions  of  amounts  collected  on the
Contracts will be subordinated,  to the extent described  herein, to such rights
of the  holders  of the  Class  II  A-1  and  Class  II B-1  Certificates.  This
subordination is intended to enhance the                                        

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likelihood  of  receipt  by the  holders  of  Class  II  A-1  and  Class  II B-1
Certificates of the full amount of their scheduled  monthly payments of interest
and the ultimate  receipt by such holders of principal  equal to the  applicable
Original Class Principal Balance.                                               

      The  protection  afforded  to the holders of the Class II A-1 and Class II
B-1 Certificates by means of the  subordination,  to the extent provided herein,
of the Class II B-2, Class II B-3, Class II B-4 and Class R Certificate  will be
accomplished  (i) by the  application of the applicable  Available  Distribution
Amount  in the order  specified  under  "--Distributions"  above and (ii) if the
applicable  Available  Distribution  Amount  on  such  Remittance  Date  is  not
sufficient to permit the  distribution  of the entire  specified  portion of the
Formula Principal  Distribution Amount, as applicable,  to the Class of Class II
A-1 Certificateholders then entitled to such distribution,  by the right of such
Class II A-1  Certificateholders to receive,  until, if ever, any such shortfall
is distributed,  a portion of future Available  Distribution  Amounts that would
otherwise have been payable to the holders of the Class II B Certificates or the
Class R  Certificate.  On each  Remittance  Date before the Class II A Principal
Balance is  reduced to zero,  the  holders of the Class II B  Certificates  will
receive the amounts specified under "--Distributions" above.                    

      Subordination  of the  Class  II  B-2,  Class  II  B-3  and  Class  II B-4
Certificates                                                                    

      The rights of the holders of the Class II B-2,  the Class II B-3 and Class
II B-4  Certificates  to  receive  distributions  of  amounts  collected  on the
Contracts  in the  Trust  Fund will be  subordinated,  to the  extent  described
herein, to such rights of the Class II B-1 Certificates.  This  subordination is
intended to enhance the likelihood of receipt by the holders of the Class II B-1
Certificates of the full amount of their scheduled  monthly payments of interest
and the ultimate  receipt by such holders of principal  equal to the  applicable
Original Class Principal Balance.                                               

      The protection  afforded to the Class II B-1  Certificates by means of the
subordination  of  the  Class  II  B-2,  the  Class  II  B-3  and  Class  II B-4
Certificates will be accomplished by the application of the applicable Available
Distribution  Amount in the order  specified under  "--Distributions"  above. In
addition, if the applicable Available Distribution Amount on any Remittance Date
is not sufficient to permit the distribution of the entire specified  portion of
the applicable  Formula Principal  Distribution  Amount,  as applicable,  to the
Class II B-1  Certificateholders  and the subordination provided by the Class II
B-2, the Class II B-3 and Class II B-4 Certificates has not been exhausted,  the
subordination  feature will protect the Class II B-1  Certificateholders  by the
right of the Class II B-1  Certificateholders  to receive,  until,  if ever, any
such  shortfall  is  distributed,  a  portion  of the  future  distributions  of
Available  Distribution  Amounts that would otherwise have been distributable to
the holders of the Class II B-2, the Class II B-3 and Class II B-4  Certificates
or the Class R Certificate.                                                     

Subordination of the Class II B-3 and Class II B-4 Certificates     

      The  rights  of  holders  of the Class II B-3 and Class II B-4 and Class R
Certificate to receive  distributions of amounts collected on the Contracts will
be subordinated,  to the extent described  herein, to such rights of the holders
of the Class II B-2 Certificates.  This subordination is intended to enhance the
likelihood  of receipt by the holders of Class II B-2  Certificates  of the full
amount of their scheduled  monthly payments of interest and the ultimate receipt
by such holders of principal  equal to the applicable  Original Class  Principal
Balance.                                                                        

      The protection afforded to the holders of the Class II B-2 Certificates by
means of the  subordination,  to the extent provided herein, of the Class II B-3
and Class II B-4 Certificates will be accomplished (i) by the application of the
applicable   Available   Distribution   Amount  in  the  order  specified  under
"--Distributions"  above. In addition, if the applicable Available  Distribution
Amount on any Remittance  Date is not sufficient to permit the  distribution  of
the entire specified  portion of the Formula Principal  Distribution  Amount, as
applicable,  to  the  Class  II B-2  Certificateholders  and  the  subordination
provided  by the  Class  II B-3 and  Class  II B-4  Certificates  has  not  been
exhausted,   the   subordination   feature   will   protect  the  Class  II  B-2
Certificateholders  by the  right  of such  Class II B-2  Certificateholders  to
receive, until, if ever, any such shortfall is distributed,  a portion of future
Available  Distribution  Amounts that would  otherwise  have been payable to the
holders of the Class II B-3 and II B-4 Certificates or the Class R Certificate. 

      In addition,  the protection  afforded to the Class II B-3 Certificates by
means of the subordination of the Class II B-4 Certificates will be accomplished
by the application of the applicable Available  Distribution Amount in the order
specified  under  "--Distributions"   above.  In  addition,  if  the  applicable
Available Distribution Amount on any Remittance Date is not sufficient to permit
the  distribution  of the entire  specified  portion of the  applicable         

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Formula  Principal  Distribution  Amount,  as  applicable,  to the  Class II B-3
Certificateholders   and  the  subordination   provided  by  the  Class  II  B-4
Certificates has not been exhausted,  the subordination feature will protect the
Class  II  B-3   Certificateholders   by  the   right   of  the   Class  II  B-3
Certificateholders   to  receive,   until,   if  ever,  any  such  shortfall  is
distributed,  a portion of the future  distributions  of Available  Distribution
Amounts that would otherwise have been distributable to the holders of the Class
II B-4 Certificates or the Class R Certificate.                                 

      However,  the  Class II B-4  Certificates  will  have the  benefit  of the
Limited  Guarantee  from CHI or the Alternate  Credit  Enhancement.  Neither the
Limited Guarantee nor the Alternate Credit Enhancement will benefit or result in
any  payments  on any other  Class of  Certificates  (other than the Class I B-2
Certificates to the limited extent described above).                            

Losses on Liquidated Contracts                                                  

      In general,  a "Liquidated  Contract" is a defaulted  Contract as to which
all amounts that the Servicer expects to recover through the date of disposition
of the  Manufactured  Home and/or any real  property  securing such Contract has
been received.                                                                  

      As described  above,  the  distribution of principal to the holders of the
Senior Certificates in each Group is intended to include the Scheduled Principal
Balance of each Contract in the related Group that became a Liquidated  Contract
during the Due Period immediately  preceding the month of such distribution.  If
the  Liquidation  Proceeds,  net of  related  Liquidation  Expenses,  from  such
Liquidated  Contract  are less  than the  Scheduled  Principal  Balance  of such
Liquidated Contract, and accrued and unpaid interest thereon, then to the extent
such  deficiency  is  not  covered  by  any  excess   interest   collections  on
non-defaulted  Contracts,  the  deficiency  may,  in effect,  be absorbed by the
Subordinate  Certificates  since a  portion  of  future  Available  Distribution
Amounts  funded by future  principal  collections  on the  Contracts,  up to the
aggregate  amount  of  such   deficiencies,   that  would  otherwise  have  been
distributable to them may be paid to the holders of the Senior Certificates.  If
the protection afforded to the holders of a Class of Subordinate Certificates by
the subordination of one or more Classes of more junior Subordinate Certificates
is exhausted, the holders of such Class of Subordinate Certificates will incur a
loss on their investment.                                                       

      If the Group I or Group II Available  Distribution  Amount, as applicable,
for any  Remittance  Date is not  sufficient  to cover,  in addition to interest
distributable  to the related Senior  Certificateholders,  the entire  specified
portion of the applicable Formula Principal Distribution Amount distributable to
the related  Senior  Certificateholders  then  entitled to such  payment on such
Remittance  Date,  then the  amount  of the  Pool  Scheduled  Principal  Balance
available  to the Class B  Certificates  (i.e.,  such Pool  Scheduled  Principal
Balance  less the  Class I A  Principal  Balance  or the  Class  II A  Principal
Balance, as applicable) on future Remittance Dates will be reduced. With respect
to each Group of  Certificates,  if,  because of  liquidation  losses,  the Pool
Scheduled  Principal  Balance  for such Group were to  decrease  proportionately
faster than  distributions to the related Senior  Certificateholders  and Senior
Subordinate   Certificateholders   reduce   the   Principal   Balance   of  such
Certificates,  the level of  protection  afforded  by the  subordination  of the
Subordinate  Certificates  (i.e., the percentage of the Pool Scheduled Principal
Balance  for the  applicable  Group  available  to the  Certificates)  would  be
reduced.  On each  Remittance  Date,  if any,  on or after the date on which the
Senior  Certificate  Principal  Balance equals or becomes  greater than the Pool
Scheduled  Principal  Balance  for such Group and so long as the Class I A-5 and
Class II B-1  Certificates  are  outstanding,  the  Class I A-5 and Class II B-1
Certificates  will bear all losses on Liquidated  Contracts  (with no ability to
recover the amount of any liquidation loss from future principal  collections on
the Contracts) and incur a loss on their investment in the Class I A-5 and Class
II B-1  Certificates.  On each Remittance  Date, if any, on or after the date on
which  the   Deficiency   Event   occurs,   the  Group  I  or  Group  II  Senior
Certificateholders, as applicable, will receive only their respective percentage
interest of  Liquidation  Proceeds  (net of  Liquidation  Expenses)  realized in
respect of Liquidated  Contracts,  rather than the Scheduled  Principal Balances
thereof,  and will  therefore bear all losses on Liquidated  Contracts  (with no
ability to recover  the amount of any  liquidation  loss from  future  principal
collections on the Contracts) and incur a loss on their  investment in the Group
I or Group II  Senior  Certificates,  as  applicable.  See  "Description  of the
Certificates--Group I Certificates and the Senior/Subordinate Structure, and "--
Group II  Certificates  and the  Senior/Subordinate  Structure"  and  "Yield and
Prepayment Considerations."                                                     

      On each Remittance  Date, if any, on or after the date on which the sum of
the  Principal  Balances of the Senior  Certificates  in either  Group equals or
becomes greater than the Pool Scheduled  Principal  Balance for such Group,     

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the  related  Senior  Certificateholders  will  receive  only  their  respective
percentage  interests of  Liquidation  Proceeds  (net of  Liquidation  Expenses)
realized  in respect of  Liquidated  Contracts  in such  Group,  rather than the
Scheduled  Principal  Balances  thereof,  and will  therefore bear all losses on
Liquidated  Contracts  (with no ability to recover the amount of any liquidation
loss from future  principal  collections  on the  Contracts) and incur a loss on
their investment in such Certificates.                                          

      But for the subordination of the Class I B-2 Certificates, the Class I B-1
Certificateholders  would absorb (i) all losses on each  Liquidated  Contract in
Group I (to the extent such loss is not covered by excess interest  collections)
and (ii) other shortfalls in the applicable  Available  Distribution Amount. If,
on any Remittance Date, the sum of the Class I A Principal Balance and the Class
I B-1  Principal  Balance  becomes  equal to or greater than the Pool  Scheduled
Principal Balance for Group I, then the Class I B-1 Certificateholders will bear
all losses on  Liquidated  Contracts  in Group I (with no ability to recover the
amount  of  any  Liquidation  Loss  from  future  principal  collections  on the
Contracts) and incur a loss on their investment in the Class I B-1 Certificates.

      But for the subordination of the Class II B-4  Certificates,  the Class II
B-3  Certificateholders  would absorb (i) all losses on each Liquidated Contract
in  Group  II (to  the  extent  such  loss is not  covered  by  excess  interest
collections or the  Overcollateralization  Amount) and (ii) other  shortfalls in
the applicable  Available  Distribution  Amount. If, on any Remittance Date, the
sum of the Class II A Principal Balance, the Class II B-1 Principal Balance, the
Class II B-2 Principal  Balance and the Class II B-3 Principal  Balance  becomes
equal to or greater than the Pool Scheduled Principal Balance for Group II, then
the Class II B-3 Certificateholders will bear all losses on Liquidated Contracts
in Group II (with no ability to recover the amount of any Liquidation  Loss from
future  principal  collections  on the  Contracts)  and  incur a loss  on  their
investment in the Class II B-3 Certificates.                                    

Limited Guarantee of CHI                                                        

      In order to mitigate  the effect of the  subordination  of the Class I B-2
Certificates or the Class II B-4  Certificates,  as applicable,  and liquidation
losses and  delinquencies  on the  Contracts  in the related  Group borne by the
Class I B-2 Certificates or the Class II B-4  Certificates,  as applicable,  CHI
will initially  provide a limited  guarantee (the "Limited  Guarantee")  against
losses that would  otherwise be absorbed by the Class I B-2  Certificates or the
Class II B-4 Certificates, as applicable. Such Limited Guarantee may be replaced
by an Alternate Credit Enhancement. See "--Alternate Credit Enhancement" below. 

      Each payment  required to be made under the Limited  Guarantee is referred
to as an "Enhancement Payment." Prior to the Remittance Date with respect to the
Class I B-2 Certificates  (the "Initial Class I B-2 Principal  Remittance Date")
on which the Class I B-1 Principal  Balance is reduced to zero, the  Enhancement
Payment  will equal the amount,  if any, by which (a) the sum of (i) the Class I
B-2 Formula  Distribution Amount (which will be equal to interest accrued during
the related  Interest Period on the Class I B-2 Principal  Balance and an amount
of principal  described in the Agreement) for such  Remittance Date and (ii) the
Class I B-2 Principal  Liquidation  Loss Amount,  if any, exceeds (b) the amount
(other than the  Enhancement  Payment) that will otherwise be distributed on the
Class I B-2  Certificates on such Remittance Date (the "Class I B-2 Distribution
Amount").  On each Remittance Date on or after the Initial Class I B-2 Principal
Remittance Date, the Enhancement Payment will equal the amount, if any, by which
the Class I B-2 Formula  Distribution  Amount  (which will include both interest
and principal)  exceeds the Class I B-2 Distribution  Amount for such Remittance
Date. Prior to the Remittance Date with respect to the Class II B-4 Certificates
(the "Initial Class II B-4 Principal Remittance Date") on which the Class II B-3
Principal  Balance is reduced to zero,  the  Enhancement  Payment will equal the
amount,  if  any,  by  which  (a)  the  sum  of (i)  the  Class  II B-4  Formula
Distribution  Amount (which will be equal to interest accrued during the related
Interest Period on the Class II B-4 Principal Balance and an amount of principal
described in the Agreement) for such  Remittance  Date and (ii) the Class II B-4
Principal  Liquidation  Loss Amount,  if any, exceeds (b) the amount (other than
the Enhancement  Payment) that will otherwise be distributed on the Class II B-4
Certificates on such Remittance Date (the "Class II B-4  Distribution  Amount").
On  each  Remittance  Date  on or  after  the  Initial  Class  II B-4  Principal
Remittance Date, the Enhancement Payment will equal the amount, if any, by which
the Class II B-4 Formula  Distribution  Amount (which will include both interest
and principal) exceeds the Class II B-4 Distribution  Amount for such Remittance
Date; provided,  however, that the Enhancement Payment with respect to the Class
II B-4 Certificates  will not include amounts in respect of the Class II B-4 Net
Funds Cap Carryover Amount.                                                     

      The "Class I B-2  Principal  Liquidation  Loss Amount" for any  Remittance
Date will equal the amount,  if any, by which (a) the Group I Formula  Principal
Distribution  Amount  (exclusive of the portion thereof specified in clause (vi)
of the definition of Formula Principal  Distribution Amount) for such Remittance
Date exceeds (b) the amount (exclusive of the Enhancement  Payment)  distributed
on the Group I Certificates on account of principal on such Remittance Date. The
Class I B-2  Principal  Liquidation  Loss  Amount  represents  future  principal
payments on the Contracts that,  because of the subordination of the Class I B-2
Certificates  and liquidation  losses on the Contracts,  will not be paid to the
Class I B-2 Certificateholders from the assets of the Trust Fund but may be paid
in the form of an Enhancement Payment.                                          

      The "Class II B-4 Principal  Liquidation  Loss Amount" for any  Remittance
Date will equal the amount,  if any, by which (a) the Group II Formula Principal
Distribution  Amount  (exclusive of the portion thereof specified in clause (vi)
of the definition of Formula Principal  Distribution Amount) for such Remittance
Date exceeds (b) the amount (exclusive of the Enhancement  Payment)  distributed
on the Group II Certificates  on account of principal on such                   

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Remittance Date. The Class II B-4 Principal  Liquidation Loss Amount  represents
future principal payments on the Contracts that, because of the subordination of
the Class II B-4 Certificates and liquidation losses on the Contracts,  will not
be paid to the Class II B-4 Certificateholders from the assets of the Trust Fund
but  may be  paid  to the  Class  II B-4  Certificateholders  in the  form of an
Enhancement Payment.                                                            

      In the  event  that,  on a  particular  Remittance  Date,  the Class I B-2
Distribution Amount or the Class II B-4 Distribution  Amount, as applicable,  in
the  applicable  Certificate  Account plus any amounts  actually  paid under the
Limited  Guarantee are not sufficient to make a full distribution of interest to
the Class I B-2  Certificateholder  or the Class II B-4  Certificateholders,  as
applicable,  the amount of the deficiency  will be carried  forward as an amount
that the Class I B-2  Certificateholders or the Class II B-4  Certificateholder,
as applicable, are entitled to receive on the next Remittance Date.             

      The Limited Guarantee will be an unsecured  general  obligation of CHI and
will not be supported by any letter of credit or other enhancement arrangement. 

      The Limited  Guarantee is for the benefit of the Class I B-2  Certificates
and Class II B-4  Certificates  only and will not result in any  payments on the
other Offered Certificates.                                                     

      As reimbursement  to CHI for Enhancement  Payments made by CHI pursuant to
the Limited  Guarantee,  CHI will be entitled to receive on each Remittance Date
an amount equal to the lesser of (a) the Available Distribution Amount, less the
portion of the Available  Distribution  Amount  distributed on the  Certificates
(other  than  the  Class  R  Certificate),  and  (b)  the  aggregate  amount  of
Enhancement Payments outstanding which remain unreimbursed as of such Remittance
Date.                                                                           

Alternate Credit Enhancement                                                    

      In the event that,  at CHI's  option,  Alternate  Credit  Enhancement  (as
defined  herein)  is  provided  and,  upon  prior  written  notice to the Rating
Agencies, the Rating Agencies shall have notified CHI, the Company, the Servicer
and  the  Trustee  in  writing  that   substitution  of  such  Alternate  Credit
Enhancement  for the  Limited  Guarantee  will not  result in the  downgrade  or
withdrawal of the then current rating of any class of the Certificates, and upon
the delivery by CHI to the Trustee of an opinion of counsel,  acceptable  to the
Trustee,  that such  action  would not cause the Trust to fail to  qualify  as a
REMIC,  the  Limited  Guarantee  shall be  released  and  shall  terminate.  The
Alternate Credit Enhancement may consist of cash or securities  deposited by CHI
or any other person in a segregated  escrow,  trust or  collateral  account or a
letter of credit,  certificate  insurance  policy or surety  bond  provided by a
third party (an "Alternate Credit  Enhancement").  On each Remittance Date after
delivery of the Alternate Credit Enhancement,  an amount, equal to the lesser of
the amount which would have been  payable  under the Limited  Guarantee  and the
amount available under such Alternate Credit  Enhancement,  shall be transferred
from such account to the applicable  Certificate Account to make payments to the
Class I B-2 and Class II B-4 Certificateholders, as applicable (the "Enhancement
Payment").  CHI shall have no obligation to replace such enhancement once it has
been exhausted.                                                                 

Advances                                                                        

      For each Remittance  Date, the Servicer will be obligated to make advances
("Monthly  Advances")  in  respect  of  delinquent  scheduled  payments  on  the
Contracts that were due in the preceding Due Period and would, in the Servicer's
judgment,  be recoverable  from related late payments,  Liquidation  Proceeds or
otherwise.                                                                      

      On or prior to each  Determination  Date,  the  Servicer  will  either (i)
deposit from its own funds the Monthly  Advance into the applicable  Certificate
Account,  (ii)  cause  appropriate  entries  to be  made in the  records  of the
applicable  Certificate Account that funds in the applicable Certificate Account
that  are not  part of the  applicable  Available  Distribution  Amount  for the
related Remittance Date have been used to make the Monthly Advance or           

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(iii) make the Monthly  Advance through any combination of clauses (i) and (ii).
Any funds held for future  distribution  and used in accordance with clause (ii)
must be restored by the Servicer  from its own funds or advance  payments on the
Contracts when they become part of a future Available  Distribution  Amount. The
Monthly Advance is the sum of delinquent  scheduled  payments due in the related
Due Period,  exclusive of all Nonrecoverable  Advances,  except that the Monthly
Advance will not exceed the amount necessary to bring the Available Distribution
Amount up to the sum of the amounts  specified  in clauses  A(i)-(x),  B(i)-(x),
C(i)-(x) or D(i)-(x),  as the case may be, under  "--Distributions--Priority  of
Distributions"  above. A Nonrecoverable  Advance is any advance made or proposed
to be made  that  the  Servicer  believes  is  not,  or if  made  would  not be,
ultimately recoverable from related Liquidation Proceeds or otherwise.          

      Monthly  Advances  are  intended to maintain a regular  flow of  scheduled
interest and principal payments to  Certificateholders  rather than to guarantee
or insure  against  losses.  The  Servicer  will  reimburse  itself for  Monthly
Advances out of collections of the late scheduled  payments.  In addition,  upon
the  determination  that a Nonrecoverable  Advance has been made in respect of a
Contract or upon a Contract  becoming a Liquidated  Contract,  the Servicer will
reimburse  itself out of funds in the  applicable  Certificate  Account  for the
delinquent  scheduled  payments on such  Contract  (exclusive  of any  scheduled
payment (i) for which no advance was made because the Servicer  determined  that
such an advance  would be a  Nonrecoverable  Advance if an advance  were made or
(ii)  that  was  recovered  out of Net  Liquidation  Proceeds  for  the  related
Contract).                                                                      

      The  Servicer  will also be  obligated  to make  advances,  to the  extent
recoverable  out of  Liquidation  Proceeds or  otherwise,  in respect of certain
taxes and insurance  premiums not paid by an Obligor on a timely basis. Funds so
advanced are reimbursable to the Servicer as provided in the Agreement.         

Reports to Certificateholders                                                   

      The Trustee will include with each distribution to each  Certificateholder
a statement as of such Remittance Date setting forth, among other things:       

                                                        [Enlarge/Download Table]

                                                                                              
(a)  the aggregate amount distributed on the Class I A-1 Certificates on such Remittance Date;
(b)  the amount of such distribution which constitutes principal;                             
(c)  the amount of such distribution which constitutes interest;                              
(d)  the remaining Class I A-1 Principal Balance;                                             
(e)  the aggregate amount distributed on the Class I A-2 Certificates on such Remittance Date;
(f)  the amount of such distribution which constitutes principal;                             
(g)  the amount of such distribution which constitutes interest;                              
(h)  the remaining Class I A-2 Principal Balance;                                             
(i)  the aggregate amount distributed on the Class I A-3 Certificates on such Remittance Date;
(j)  the amount of such distribution which constitutes principal;                             
(k)  the amount of such distribution which constitutes interest;                              
(l)  the remaining Class I A-3 Principal Balance;                                             
(m)  the aggregate amount distributed on the Class I A-4 Certificates on such Remittance Date;
(n)  the amount of such distribution which constitutes principal;                             
(o)  the amount of such distribution which constitutes interest;                              
(p)  the remaining Class I A-4 Principal Balance;                                             
(q)  the aggregate amount distributed on the Class I A-5 Certificates on such Remittance Date;
(r)  the amount of such distribution which constitutes principal;                             
(s)  the amount of such distribution which constitutes interest;                              
(t)  the remaining Class I A-5 Principal Balance;                                             
(u)  the aggregate amount distributed on the Class I M-1 Certificates on such Remittance Date;
(v)  the amount of such distribution which constitutes principal;                             


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                                                        [Enlarge/Download Table]


                                                                                                    
(w)   the amount of such distribution which constitutes interest;                                   
(x)   the remaining Class I M-1 Principal Balance;                                                  
(y)   the aggregate amount distributed on the Class I B-1 Certificates on such Remittance Date;     
(z)   the amount of such distribution which constitutes principal;                                  
(aa)  the amount of such distribution which constitutes interest;                                   
(bb)  the remaining Class I B-1 Principal Balance;                                                  
(cc)  the aggregate amount distributed on the Class I B-2 Certificates on such Remittance Date;     
(dd)  the amount of such distribution which constitutes principal;                                  
(ee)  the amount of such distribution which constitutes interest;                                   
(ff)  the amount, if any, by which the Class I B-2 Formula Distribution Amount exceeds the remaining
      Group I Available Distribution Amount for such Remittance Date;                               
(gg)  the Class I B-2 Liquidation Loss Amount, if any, for such Remittance Date;                    
(hh)  the Enhancement Payment, if any, for such Remittance Date;                                    
(ii)  the remaining Class I B-2 Principal Balance;                                                  
(jj)  the aggregate amount distributed on the Class II A-1 Certificates on such Remittance Date;    
(kk)  the amount of such distribution which constitutes principal;                                  
(ll)  the amount of such distribution which constitutes interest;                                   
(mm)  the remaining Class II A-1 Principal Balance;                                                 
(nn)  the aggregate amount distributed on the Class II B-1 Certificates on such Remittance Date;    
(oo)  the amount of such distribution which constitutes principal;                                  
(pp)  the amount of such distribution which constitutes interest;                                   
(qq)  the remaining Class II B-1 Principal Balance;                                                 
(rr)  the aggregate amount distributed on the Class II B-2 Certificates on such Remittance Date;    
(ss)  the amount of such distribution which constitutes principal;                                  
(tt)  the amount of such distribution which constitutes interest;                                   
(uu)  the remaining Class II B-2 Principal Balance;                                                 
(vv)  the aggregate amount distributed on the Class II B-3 Certificates on such Remittance Date;    
(ww)  the amount of such distribution which constitutes principal;                                  
(xx)  the amount of such distribution which constitutes interest;                                   
(yy)  the remaining Class II B-3 Principal Balance;                                                 
(zz)  the aggregate amount distributed on the Class II B-4 Certificates on such Remittance Date;    
(aaa) the amount of such distribution which constitutes principal;                                  
(bbb) the amount of such distribution which constitutes interest;                                   
(ccc) the  amount,  if any, by which the Class II B-4 Formula  Distribution  Amount  exceeds  the   
      remaining  Group II  Available Distribution Amount for such Remittance Date;                  
(ddd) the Class II B-4 Liquidation Loss Amount, if any, for such Remittance Date;                   
(eee) the Enhancement Payment, if any, for such Remittance Date;                                    
(fff) the remaining Class II B-4 Principal Balance;                                                 
(ggg) the number of and aggregate  unpaid principal  balance of Group I and Group II Contracts with 
      payments  delinquent 31 to 59, 60 to 89 and 90 or more days, respectively; and                
(hhh) the amount of fees payable out of the Trust Fund.                                             


      In  addition,  within a  reasonable  period of time  after the end of each
calendar  year, the Trustee will furnish a report to each  Certificateholder  of
record at any time during such calendar year as to certain  aggregate of amounts
for such calendar year.                                                         

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Optional Termination                                                            

      The  Agreement  provides  that on any  Remittance  Date  after  the  first
Remittance Date on which the sum of the Group I Pool Scheduled Principal Balance
and the  Group  II Pool  Scheduled  Principal  Balance  is less  than 10% of the
Cut-off  Date Pool  Principal  Balance,  the  Company  (if it is no  longer  the
Servicer)  and the Servicer  will each have the option to  repurchase,  upon the
Company or the Servicer  giving notice mailed no later than the first day of the
month next preceding the month of the exercise of such option,  all  outstanding
Contracts  at a price  equal  to the  greater  of (a) the sum of (x) 100% of the
outstanding  principal  balance of each Contract  (other than any Contract as to
which the related  Manufactured  Home has been acquired in realizing thereon and
whose fair  market  value is  included  pursuant  to clause (y) below) as of the
final Remittance  Date, and (y) the fair market value of such acquired  property
(as  determined by the Company or the Servicer,  as the case may be) and (b) the
aggregate  fair market value (as  determined by the Company or the Servicer,  as
the case may be) of all of the assets of the Trust Fund, plus, in each case, any
unpaid interest on the Certificates due on prior Remittance Dates as well as one
month's  interest  at the  rate  specified  in the  Agreement  on the  Scheduled
Principal  Balance of each  Contract  (including  any  Contract  as to which the
related  Manufactured  Homes  has been  repossessed  and not yet  disposed  of).
Notwithstanding  the foregoing,  the option  referred to in this paragraph shall
not be exercisable unless there will be distributed to the Certificateholders an
amount equal to 100% of the outstanding  principal  balance of each  Certificate
plus one  month's  interest  thereon at the  related  Remittance  Rate,  and any
previously undistributed shortfalls in interest due thereon.                    

The Trustee                                                                     

      The Bank of New York, a New York banking  corporation,  has its  corporate
trust offices at 101  BarclayStreet,  New York, New York 10286.  The Company and
its affiliates may have  commercial  transactions  with the Trustee from time to
time.                                                                           

      The  Trustee may resign at any time,  in which  event the Company  will be
obligated  to appoint a  successor  Trustee.  The  Company  may also  remove the
Trustee if the  Trustee  ceases to be  eligible  to  continue  as such under the
Agreement  or if the  Trustee  becomes  insolvent.  In such  circumstances,  the
Company will also be obligated to appoint a successor  Trustee.  Any resignation
or removal of the Trustee and appointment of a successor Trustee will not become
effective until acceptance of the appointment by the successor Trustee.         

Registration of the Offered Certificates                                        

      The Offered Certificates will be book-entry  Certificates (the "Book-Entry
Certificates").  Persons acquiring beneficial ownership interests in the Offered
Certificates ("Certificate Owners") will hold their Offered Certificates through
The  Depository  Trust  Company  ("DTC")  in the  United  States,  or  Cedelbank
("Cedel") or Euroclear (in Europe) if they are participants of such systems,  or
indirectly  through  organizations  which are participants in such systems.  The
Book-Entry  Certificates will be issued in one or more certificates  which equal
the aggregate  principal balance of the Offered  Certificates and will initially
be registered in the name of Cede & Co., the nominee of DTC. Cedel and Euroclear
will hold omnibus positions on behalf of their  participants  through customers'
securities  accounts  in  Cedel's  and  Euroclear's  names on the books of their
respective  depositaries  which in turn will hold such  positions in  customers'
securities  accounts in the  depositaries'  names on the books of DTC.  Citibank
will act as  depositary  for  Cedel  and The  Chase  Manhattan  Bank will act as
depositary  for  Euroclear  (in  such  capacities,  individually  the  "Relevant
Depositary" and  collectively the "European  Depositaries").  Investors may hold
such   beneficial   interests  in  the   Book-Entry   Certificates   in  minimum
denominations  of $50,000.  Except as  described  below,  no person  acquiring a
Book-Entry  Certificate (each, a "beneficial owner") will be entitled to receive
a  physical   certificate   representing   such   Certificate   (a   "Definitive
Certificate").  Unless  and until  Definitive  Certificates  are  issued,  it is
anticipated that the only  "Certificateholder"  of the Offered Certificates will
be  Cede  &  Co.,   as  nominee  of  DTC.   Certificate   Owners   will  not  be
Certificateholders as that term is used in the Agreement. Certificate Owners are
only permitted to exercise their rights indirectly through Participants and DTC.

      The  beneficial  owner's  ownership  of a Book-Entry  Certificate  will be
recorded on the records of the brokerage firm, bank, thrift institution or other
financial  intermediary  (each, a "Financial  Intermediary")  that maintains the
beneficial   owner's   account  for  such  purpose.   In  turn,   the  Financial
Intermediary's  ownership of such Book-Entry Certificate will be recorded on the
records of DTC (or of a participating  firm that acts as agent for the Financial
Intermediary,  whose interest will in turn be recorded on the records of DTC, if
the beneficial  owner's  Financial  Intermediary is not a DTC participant and on
the records of Cedel or Euroclear, as appropriate).                             

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      Certificate  Owners will  receive all  distributions  of  principal of and
interest  on the  Offered  Certificates  from the  Trustee  through  DTC and DTC
participants.  While the Offered  Certificates are outstanding (except under the
circumstances  described  below),  under the rules,  regulations  and procedures
creating and affecting DTC and its operations (the "Rules"),  DTC is required to
make  book-entry  transfers  among  Participants  on whose  behalf  it acts with
respect to the Offered  Certificates  and is  required  to receive and  transmit
distributions  of  principal  of, and  interest  on, the  Offered  Certificates.
Participants  and  indirect  participants  with  whom  Certificate  Owners  have
accounts with respect to Offered  Certificates  are  similarly  required to make
book-entry  transfers and receive and transmit such  distributions  on behalf of
their respective  Certificate Owners.  Accordingly,  although Certificate Owners
will not possess  certificates  representing  their respective  interests in the
Offered Certificates,  the Rules provide a mechanism by which Certificate Owners
will receive distributions and will be able to transfer their interest.         

      Certificateholders will not receive or be entitled to receive certificates
representing  their  respective  interests in the Offered  Certificates,  except
under the limited  circumstances  described  below.  Unless and until Definitive
Certificates  are  issued,  Certificateholders  who  are  not  Participants  may
transfer  ownership  of  Offered  Certificates  only  through  Participants  and
indirect participants by instructing such Participants and indirect participants
to transfer Offered  Certificates,  by book-entry transfer,  through DTC for the
account  of the  purchasers  of such  Offered  Certificates,  which  account  is
maintained with their respective Participants. Under the Rules and in accordance
with DTC's normal  procedures,  transfers  of ownership of Offered  Certificates
will be executed through DTC and the accounts of the respective  Participants at
DTC will be debited and  credited.  Similarly,  the  Participants  and  indirect
participants  will make debits or credits,  as the case may be, on their records
on behalf of the selling and purchasing Certificateholders.                     

      Because of time zone differences,  credits of securities received in Cedel
or Euroclear as a result of a transaction with a Participant will be made during
subsequent securities settlement processing and dated the business day following
the DTC settlement  date.  Such credits or any  transactions  in such securities
settled  during such  processing  will be reported to the relevant  Euroclear or
Cedel  Participants on such business day. Cash received in Cedel or Euroclear as
a result of sales of  securities by or through a Cedel  Participant  (as defined
below) or Euroclear  Participant (as defined below) to a DTC Participant will be
received  with value on the DTC  settlement  date but will be  available  in the
relevant  Cedel or Euroclear  cash account only as of the business day following
settlement in DTC. For information with respect to tax documentation  procedures
relating   to   the    Certificates,    see   "Certain    Federal   Income   Tax
Consequences--REMIC Series--Taxation of Certain Foreign Investors" and "--Backup
Withholding"  in the  Prospectus  and  "Global  Clearance,  Settlement  and  Tax
Documentation   Procedures--Certain   U.S.  Federal  Income  Tax   Documentation
Requirements" in Annex I hereto.                                                

      Transfers  between  Participants  will occur in accordance with DTC rules.
Transfers  between Cedel  Participants and Euroclear  Participants will occur in
accordance with their respective rules and operating procedures.                

      Cross-market  transfers  between  persons  holding  directly or indirectly
through  DTC,  on the  one  hand,  and  directly  or  indirectly  through  Cedel
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance  with DTC  rules on  behalf of the  relevant  European  international
clearing  system  by  the  Relevant  Depositary;   however,  such  cross  market
transactions  will require  delivery of  instructions  to the relevant  European
international  clearing system by the  counterparty in such system in accordance
with its rules and procedures  and within its  established  deadlines  (European
time).  The  relevant  European  international  clearing  system  will,  if  the
transaction  meets its  settlement  requirements,  deliver  instructions  to the
Relevant  Depositary to take action to effect final  settlement on its behalf by
delivering or receiving  securities  in DTC, and making or receiving  payment in
accordance with normal  procedures for same day funds  settlement  applicable to
DTC. Cedel Participants and Euroclear  Participants may not deliver instructions
directly to the European Depositaries.                                          

      DTC is a New  York-chartered  limited  purpose trust company that performs
services for its participants,  some of which (and/or their representatives) own
DTC. In  accordance  with its normal  procedures,  DTC is expected to record the
positions held by each DTC participant in the Book-Entry  Certificates,  whether
held for its own  account  or as a  nominee  for  another  person.  In  general,
beneficial ownership of Book-Entry Certificates will be subject to the Rules, as
in effect from time to time.                                                    

      Cedelbank,  67  Bd  Grande-Duchesse  Charlotte,   L-1331  Luxembourg,  was
incorporated in 1970 as a limited  company under  Luxembourg law. Cedel is owned
by banks, securities dealers and financial institutions, and currently has about
100 shareholders,  including U.S. financial  institutions or their subsidiaries.
No single entity may own more than five percent of Cedel's stock.               

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      Cedel is  registered  as a bank in  Luxembourg,  and as such is subject to
regulation by the Institute  Monetaire  Luxembourgeois,  "IML",  the  Luxembourg
Monetary Authority, which supervises Luxembourg banks.                          

      Cedel  holds  securities  for its  customers  ("Cedel  Participants")  and
facilitates   the  clearance  and  settlement  of  securities   transactions  by
electronic  book-entry transfers between their accounts.  Cedel provides various
services,  including  safekeeping,  administration,  clearance and settlement of
internationally  traded securities and securities  lending and borrowing.  Cedel
also deals  with  domestic  securities  markets  in  several  countries  through
established  depository and custodial  relationships.  Cedel has  established an
electronic  bridge  with  Morgan  Guaranty  Trust as the  Euroclear  Operator in
Brussels to facilitate  settlement of trades between  systems.  Cedel  currently
accepts over 70,000 securities issues on its books.                             

      Cedel's  customers  are  world-wide   financial   institutions   including
underwriters,  securities  brokers  and  dealers,  banks,  trust  companies  and
clearing corporations. Cedel's United States customers are limited to securities
brokers  and  dealers  and  banks.  Currently,  Cedel  has  approximately  3,000
customers located in over 60 countries,  including all major European countries,
Canada,  and the United States.  Indirect  access to Cedel is available to other
institutions  which clear through or maintain a custodial  relationship  with an
account holder of Cedel.                                                        

      Euroclear  was  created in 1968 to hold  securities  for its  participants
("Euroclear   Participants")  and  to  clear  and  settle  transactions  between
Euroclear  Participants  through  simultaneous  electronic  book-entry  delivery
against  payment,   thereby  eliminating  the  need  for  physical  movement  of
certificates and any risk from lack of simultaneous  transfers of securities and
cash.  Transactions  may be settled in any of 29  currencies,  including  United
States dollars. Euroclear includes various other services,  including securities
lending and borrowing and interfaces with domestic markets in several  countries
generally  similar  to the  arrangements  for  cross-market  transfers  with DTC
described above. Euroclear is operated by the Brussels, Belgium office of Morgan
Guaranty Trust Company of New York (the  "Euroclear  Operator"),  under contract
with Euroclear  Clearance Systems S.C., a Belgian  cooperative  corporation (the
"Cooperative").  All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator,  not the Cooperative.  The Cooperative  establishes
policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants
include banks  (including  central  banks),  securities  brokers and dealers and
other  professional  financial  intermediaries.  Indirect access to Euroclear is
also  available  to other  firms that  clear  through  or  maintain a  custodial
relationship with a Euroclear Participant, either directly or indirectly.       

      The  Euroclear  Operator  is the  Belgian  branch  of a New  York  banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal  Reserve  System
and the New  York  State  Banking  Department,  as well as the  Belgian  Banking
Commission.                                                                     

      Securities  clearance  accounts  and  cash  accounts  with  the  Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating  Procedures of the Euroclear System and applicable Belgian
law (collectively,  the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from  Euroclear,  and receipts of payments  with respect to  securities  in
Euroclear.  All  securities  in Euroclear  are held on a fungible  basis without
attribution of specific  certificates to specific securities clearance accounts.
The  Euroclear  Operator acts under the Terms and  Conditions  only on behalf of
Euroclear  Participants,  and has no  record  of or  relationship  with  persons
holding through Euroclear Participants.                                         

      Distributions  on  the  Book-Entry  Certificates  will  be  made  on  each
Remittance Date by the Trustee to DTC. DTC will be responsible for crediting the
amount of such payments to the accounts of the  applicable DTC  participants  in
accordance  with  DTC's  normal   procedures.   Each  DTC  participant  will  be
responsible  for  disbursing  such  payments  to the  beneficial  owners  of the
Book-Entry  Certificates  that it represents and to each Financial  Intermediary
for which it acts as agent. Each such Financial Intermediary will be responsible
for  disbursing  funds to the beneficial  owners of the Book-Entry  Certificates
that it represents.                                                             

      Under  a  book-entry   format,   beneficial   owners  of  the   Book-Entry
Certificates may experience some delay in their receipt of payments,  since such
payments  will be  forwarded  by the  Trustee to Cede & Co.  Distributions  with
respect to Certificates  held through Cedel or Euroclear will be credited to the
cash accounts of Cedel Participants or Euroclear Participants in accordance with
the  relevant  system's  rules and  procedures,  to the extent  received  by the
Relevant  Depositary.  Such  distributions  will be subject to tax  reporting in
accordance  with relevant United States tax laws and  regulations.  See "Certain
Federal  Income Tax  Consequences--REMIC  Series--Taxation  of  Certain  Foreign
Investors" and "--Backup  Withholding" in the  Prospectus.  Because DTC can only
act on behalf of Financial Intermediaries,  the ability of a beneficial owner to
pledge Book-Entry Certificates to persons or entities that do not               

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participate  in the Depository  system,  or otherwise take actions in respect of
such  Book-Entry  Certificates,  may be  limited  due to the  lack  of  physical
certificates  for such  Book-Entry  Certificates.  In addition,  issuance of the
Book-Entry  Certificates  in  book-entry  form may reduce the  liquidity of such
Certificates in the secondary  market since certain  potential  investors may be
unwilling  to  purchase  Certificates  for which  they  cannot  obtain  physical
certificates.                                                                   

      Monthly and annual reports on the Trust will be provided to Cede & Co., as
nominee of DTC,  and may be made  available  by Cede to  beneficial  owners upon
request,  in accordance with the rules,  regulations and procedures creating and
affecting  the  Depository,  and to the  Financial  Intermediaries  to whose DTC
accounts the Book-Entry Certificates of such beneficial owners are credited.    

      DTC has advised the Trustee that, unless and until Definitive Certificates
are issued, DTC will take any action permitted to be taken by the holders of the
Book-Entry Certificates under the Agreement only at the direction of one or more
Financial  Intermediaries to whose DTC accounts the Book-Entry  Certificates are
credited,  to the  extent  that such  actions  are taken on behalf of  Financial
Intermediaries whose holdings include such Book-Entry Certificates. Cedel or the
Euroclear Operator,  as the case may be, will take any other action permitted to
be taken  by a  Certificateholder  under  the  Agreement  on  behalf  of a Cedel
Participant or Euroclear  Participant only in accordance with its relevant rules
and procedures  and subject to the ability of the Relevant  Depositary to effect
such actions on its behalf  through DTC. DTC may take actions,  at the direction
of the related  Participants,  with respect to some Offered  Certificates  which
conflict with actions taken with respect to other Offered Certificates.         

      Definitive  Certificates  will  be  issued  to  beneficial  owners  of the
Book-Entry Certificates,  or their nominees, rather than to DTC, only if (a) DTC
or the Company  advises the  Trustee in writing  that DTC is no longer  willing,
qualified or able to  discharge  properly  its  responsibilities  as nominee and
depository  with respect to the Book-Entry  Certificates  and the Company or the
Trustee is unable to locate a qualified successor,  (b) the Company, at its sole
option, with the consent of the Trustee, elects to terminate a book-entry system
through  DTC or (c)  after the  occurrence  of an Event of  Default,  beneficial
owners  having  Percentage  Interests  aggregating  not  less  than  51%  of the
Book-Entry  Certificates  advise  the  Trustee  and DTC  through  the  Financial
Intermediaries  and the DTC  participants in writing that the  continuation of a
book-entry system through DTC (or a successor  thereto) is no longer in the best
interests of beneficial owners.                                                 

      Upon the  occurrence  of any of the events  described  in the  immediately
preceding  paragraph,  the Trustee  will be  required  to notify all  beneficial
owners of the  occurrence  of such  event and the  availability  through  DTC of
Definitive  Certificates.  Upon  surrender by DTC of the global  certificate  or
certificates  representing  the Book-Entry  Certificates  and  instructions  for
re-registration,  the Trustee will issue Definitive Certificates, and thereafter
the Trustee  will  recognize  the  holders of such  Definitive  Certificates  as
Certificateholders under the Agreement.                                         

      Although DTC, Cedel and Euroclear have agreed to the foregoing  procedures
in order to facilitate  transfers of Offered  Certificates among participants of
DTC, Cedel and Euroclear, they are under no obligation to perform or continue to
perform such procedures and such procedures may be discontinued at any time.    

      Neither  the  Company,   the  Servicer  nor  the  Trustee  will  have  any
responsibility  for any aspect of the records  relating  to or payments  made on
account of beneficial ownership interests of the Book-Entry Certificates held by
Cede & Co., as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.                        

      DTC management is aware that some computer applications,  systems, and the
like for processing  data  ("Systems")  that are dependent upon calendar  dates,
including dates before,  on, and after January 1, 2000, may encounter "Year 2000
problems." DTC has informed its  Participants and other members of the financial
community (the  "Industry")  that it has developed and is implementing a program
so that its Systems,  as the same relate to the timely payment of  distributions
(including  principal  and  income  payments)  to  securityholders,   book-entry
deliveries,  and settlement of trades within DTC ("DTC  Services"),  continue to
function  appropriately.  This  program  includes a technical  assessment  and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase,  which is expected to be completed  within the  appropriate  time
frames.                                                                         

      However,  DTC's ability to perform properly its services is also dependent
upon other  parties,  including but not limited to issuers and their agents,  as
well as third party vendors from whom DTC licenses  software and  hardware,  and
third  party  vendors on whom DTC relies for  information  of the  provision  of
services,  including telecommunication and electrical utility service providers,
among  others.  DTC has informed the Industry  that it is  contacting  (and will
continue to contact)  third party  vendors from whom DTC acquires  services  to:
(i) impress upon them the importance of such services being Year 2000 complaint;
(ii)  determine the extent of their efforts for Year                            

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2000 remediation (and, as appropriate,  testing) of their services. In addition,
DTC  is in  the  process  of  developing  such  contingency  plans  as it  deems
appropriate.                                                                    

      According to DTC, the foregoing  information  with respect to DTC has been
provided to the Industry for informational  purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.      

 USE OF PROCEEDS

      Substantially  all of the net proceeds to be received from the sale of the
Offered Certificates will be added to the general funds of the Company.         

 CERTAIN FEDERAL INCOME TAX CONSEQUENCES

      An  election  will be made  to  treat  the  Trust  Fund as a "real  estate
mortgage  investment  conduit" (a "REMIC") for federal income tax purposes.  The
Senior and Subordinate  Certificates will constitute  "regular interests" in the
REMIC,  and the Class R Certificate  will constitute the sole class of "residual
interest" in the REMIC.                                                         

Original Issue Discount                                                         

      The  Class I B-1  Certificates  will  and all  other  classes  of  Offered
Certificates  may be treated as having been issued with original  issue discount
for federal income tax purposes.  For purposes of determining the amount and the
rate of accrual of original  issue  discount  and market  discount,  the Company
intends to assume  that there will be  prepayments  on the  Contracts  at a rate
equal to 225% of the  Prepayment  Model  (as  defined  herein)  for the  Group I
Contracts  and 250% of the  Prepayment  Model  for the  Group II  Contracts.  No
representation  is made as to whether the Contracts  will prepay at that rate or
any other rate.  See "Yield and Prepayment  Considerations"  herein and "Certain
Federal Income Tax Consequences" in the Prospectus.                             

      A reasonable  application of the principles of the OID  Regulations to the
Floating Rate Certificates  generally would be to report all income with respect
to such Certificates as original issue discount for each period,  computing such
original issue  discount (i) by assuming that the value of the applicable  index
with  respect  to  such  Certificates  will  remain  constant  for  purposes  of
determining  the original  yield to maturity of each such Class of  Certificates
and projecting future distributions on such Certificates,  thereby treating such
Certificates  as fixed rate  instruments  to which the original  issue  discount
computation  rules  described  in the  Prospectus  can be  applied,  and (ii) by
accounting  for any  positive or negative  variation  in the actual value of the
applicable index in any period from its assumed value as a current adjustment to
original issue discount with respect to such period. See "Certain Federal Income
Tax Consequences" in the Prospectus.                                            

      The Offered  Certificates  will be treated as regular interests in a REMIC
under section 860G of the Code.  Accordingly,  the Offered  Certificates will be
treated as (i) assets described in section  7701(a)(19)(C) of the Code, and (ii)
"real estate assets" within the meaning of section  856(c)(5)(B) of the Code, in
each case to the extent  described  in the  Prospectus.  Interest on the Offered
Certificates will be treated as interest on obligations  secured by mortgages on
real property within the meaning of section 856(c)(3)(B) of the Code to the same
extent that the Offered  Certificates  are  treated as real estate  assets.  See
"Certain Federal Income Tax Consequences" in the Prospectus.                    

Effect of Losses and Delinquencies                                              

      As described above under "Description of the  Certificates,"  with respect
to each Group of Certificates,  the Subordinate Certificates are subordinated to
the Senior  Certificates.  In the event there are losses or delinquencies on the
Contracts in a certain Group, amounts that otherwise would be distributed on the
Subordinate  Certificates of such Group may instead be distributed on the Senior
Certificates of such Group. Holders of the Subordinate Certificates nevertheless
will  be  required  to  report   interest  with  respect  to  such   Subordinate
Certificates  under an  accrual  method  without  giving  effect to  delays  and
reductions in  distributions  on such  Certificates  attributable  to losses and
delinquencies  on the Contracts in such Contract Group,  except to the extent it
can be established, for tax purposes, that such amounts are uncollectible.  As a
result, the amount of income reported by holders of the Subordinate Certificates
in any period could significantly  exceed the amount of cash distributed to such
holders  in that  period.  The  holders  of the  Subordinate  Certificates  will
eventually  be allowed a loss (or will be  allowed to report a lesser  amount of
income)  to the  extent  that the  aggregate  amount  of  distributions  on such
Certificates is reduced as a result                                             

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of losses and delinquencies on the Contracts in the Contract Pool. However,  the
timing and  character  of such  losses or  reductions  in income are  uncertain.
Although  not  entirely  clear,  it  appears  that  holders  of the  Subordinate
Certificates that are corporations  should in general be allowed to deduct as an
ordinary loss any loss sustained  during the taxable year on account of any such
Certificates  becoming  wholly or  partially  worthless,  and that,  in general,
holders of Certificates that are not corporations should be allowed to deduct as
short-term capital loss any loss sustained during the taxable year on account of
any such Certificates becoming wholly worthless. Although the matter is unclear,
non-corporate  holders of  Certificates  may be allowed a bad debt  deduction at
such time that the  principal  balance  of any such  Certificate  is  reduced to
reflect  realized losses resulting from any liquidated  Contracts.  The Internal
Revenue Service,  however,  could take the position that  non-corporate  holders
will be allowed a bad debt deduction to reflect  realized  losses only after all
Contracts  remaining  in the  related  Trust  Fund have been  liquidated  or the
Certificates have been otherwise retired. Potential investors and Holders of the
Certificates  are  urged  to  consult  their  own  tax  advisors  regarding  the
appropriate  timing,  amount and character of any loss sustained with respect to
such  Certificates,  including  any loss  resulting  from the failure to recover
previously  accrued  interest  or  discount  income.   Special  loss  rules  are
applicable to banks and thrift institutions,  including rules regarding reserves
for bad  debts.  Such  taxpayers  are  advised  to  consult  their tax  advisors
regarding the treatment of losses on Certificates.                              

Backup Withholding                                                              

      Certain  Certificate  Owners may be subject to backup  withholding  at the
rate of 31% with  respect to interest  paid on the Offered  Certificates  if the
Certificate  Owners,  upon issuance,  fail to supply the Trustee or their broker
with  their  taxpayer  identification  number,  furnish  an  incorrect  taxpayer
identification number, fail to report interest,  dividends, or other "reportable
payments" (as defined in the Code)  properly,  or, under certain  circumstances,
fail to provide the Trustee or their  broker with a certified  statement,  under
penalty of perjury, that they are not subject to backup withholding.            

      The Trustee  will be required to report  annually to the IRS,  and to each
Offered  Certificateholder  of  record,  the  amount of  interest  paid (and OID
accrued,  if any) on the  Offered  Certificates  (and  the  amount  of  interest
withheld for federal income taxes, if any) for each calendar year,  except as to
exempt holders  (generally,  holders that are corporations,  certain  tax-exempt
organizations or nonresident aliens who provide certification as to their status
as nonresidents).  As long as the only "Class A Certificateholder"  of record is
Cede,  as nominee for DTC,  Certificate  Owners and the IRS will receive tax and
other  information  including the amount of interest  paid on such  Certificates
owned from Participants and indirect  Participants rather than from the Trustee.
(The Trustee,  however,  will respond to requests for necessary  information  to
enable Participants, indirect Participants and certain other persons to complete
their reports.) Each non-exempt  Certificate  Owner will be required to provide,
under penalty of perjury,  a certificate  on IRS Form W-9  containing his or her
name, address,  correct federal taxpayer  identification  number and a statement
that  he or she  is not  subject  to  backup  withholding.  Should  a  nonexempt
Certificate Owner fail to provide the required  certification,  the Participants
or indirect  Participants (or the Paying Agent) will be required to withhold 31%
of the interest (and principal)  otherwise payable to the holder,  and remit the
withheld  amount to the IRS as a credit against the holder's  federal income tax
liability.                                                                      

      Any amounts withheld under the backup  withholding rules from a payment to
a Certificate Owner will be deemed distributed to the affected Certificate Owner
for all purposes of the  Certificates and the Agreement.  In addition,  any such
amount would be allowed as a refund or credit against such owner's United States
federal  income tax provided that the required  information  is furnished to the
IRS.                                                                            

Federal Income Tax Consequences to Foreign Investors                            

      The following  information  describes the United States federal income tax
treatment of holders that are not United States persons  ("Foreign  Investors").
The term  "Foreign  Investors"  means any  person  other  than (i) a citizen  or
resident of the United States,  (ii) a corporation,  partnership or other entity
treated as a corporation  or  partnership  for United States  federal income tax
purposes  organized  in or under  the laws of the  United  States  or any  state
thereof or the  District  of  Columbia  (other  than a  partnership  that is not
treated as a United States person under any  applicable  Treasury  regulations),
(iii) an estate,  the income of which is  includible  in gross income for United
States federal income tax purposes, regardless of its source or (iv) 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
authority to                                                                    

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control all substantial  decisions of the trust.  Notwithstanding  the preceding
sentence,  to the extent  provided in Treasury  regulations,  certain  trusts in
existence on August 20, 1996 which were treated as United  States  persons prior
to such date that elect to continue to be treated as United States  persons will
not be considered a Foreign Investor.                                           

      The Code and Treasury  regulations  generally  subject  interest paid to a
Foreign  Investor to a  withholding  tax at a rate of 30%  (unless  such rate is
reduced by an applicable  treaty).  The withholding tax, however,  is eliminated
with  respect  to  certain  "portfolio  debt  investments"   issued  to  Foreign
Investors.  Portfolio  debt  investments  include  debt  instruments  issued  in
registered  form for which the United States payor receives a statement that the
beneficial  owner  of  the  instrument  is  a  Foreign  Investor.   The  Offered
Certificates  will be issued in registered  form,  therefore if the  information
required by the Code is furnished (as described  below) and no other  exceptions
to the withholding  tax exemption are  applicable,  there will be no withholding
tax on interest paid to a Foreign Investor.                                     

      For the Offered  Certificates  to constitute  portfolio  debt  investments
exempt  from the United  States  withholding  tax,  the  withholding  agent must
receive from the Certificate Owner an executed IRS Form W-8 signed under penalty
of perjury by the  Certificate  Owner  stating that the  Certificate  Owner is a
Foreign  Investor and providing such Certificate  Owner's name and address.  The
statement  must be received by the  withholding  agent in the  calendar  year in
which the interest  payment is made, or in either of the two preceding  calendar
years.                                                                          

      A  Certificate  Owner that is a nonresident  alien or foreign  corporation
will not be subject to United States  federal income tax on gain realized on the
sale,  exchange,  or redemption of such Offered  Certificate,  provided that (i)
such gain is not  effectively  connected with a trade or business  carried on by
the Certificate Owner in the United States and (ii) in the case of a Certificate
Owner that is an individual, such Certificate Owner is not present in the United
States for 183 days or more during the taxable year in which such sale, exchange
or redemption occurs and certain other requirements are met.                    

      On October 6, 1997, the Treasury  Department  issued new regulations  (the
"New Regulations") which make certain  modifications to the withholding,  backup
withholding and information reporting rules described above. The New Regulations
attempt to unify certification  requirements and modify reliance standards.  The
New Regulations will generally be effective for payments made after December 31,
2000,  subject to certain transition rules.  Prospective  investors are urged to
consult their own tax advisors regarding the New Regulations.                   

      For further  information  regarding the federal income tax consequences of
investing in the Certificates,  see "Certain Federal Income Tax Consequences" in
the Prospectus.                                                                 

STATE TAX CONSIDERATIONS

      The Company makes no  representations  regarding the tax  consequences  of
purchase,  ownership or  disposition of the Offered  Certificates  under the tax
laws  of  any  state.   Investors  considering  an  investment  in  the  Offered
Certificates   should  consult  their  own  tax  advisors   regarding  such  tax
consequences.                                                                   

      All investors should consult their own tax advisors regarding the federal,
state,  local or foreign income tax consequences of the purchase,  ownership and
disposition of the Offered Certificates.                                        

ERISA CONSIDERATIONS

      The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans that are subject to ERISA
("Plans")  and on persons who are  fiduciaries  with respect to such Plans.  See
"ERISA Considerations" in the Prospectus.                                       

Senior Certificates                                                             

      As discussed in the Prospectus under "ERISA Considerations" and subject to
the limitations  discussed  thereunder,  the Company believes that the Exemption
(as defined in the Prospectus) granted to Prudential Securities Incorporated and
Banc  of  America  Securities  LLC  (the  "Underwriters"),  will  apply  to  the
acquisition and holding by Plans of Senior Certificates sold by the Underwriters
and that all conditions of the Exemption  other than those within the control of
the investors have been met. See "ERISA  Considerations"  in the Prospectus.  In
addition,  as of the date hereof, no obligor with respect to Contracts  included
in  the  Trust  Fund  constitutes  more  than  five  percent  of  the  aggregate
unamortized principal balance of the assets of the Trust Fund.                  

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      Employee benefit plans that are governmental  plans (as defined in section
3(32) of ERISA) and church plans (as defined in section  3(33) of ERISA) are not
subject to ERISA requirements. Accordingly, assets of such plans may be invested
in the Senior  Certificates  without regard to the ERISA restrictions  described
above, subject to applicable provisions of other federal and state laws.        

      Any  Plan  fiduciary  who  proposes  to  cause a Plan to  purchase  Senior
Certificates  should  consult with its own counsel with respect to the potential
consequences  under ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"), of the Plan's acquisition and ownership of Senior Certificates.  Assets
of a Plan or individual  retirement account should not be invested in the Senior
Certificates  unless it is clear  that the  assets of the Trust Fund will not be
plan assets or unless it is clear that the Exemption or a prohibited transaction
class exemption will apply and exempt all potential prohibited transactions.    

Subordinate Certificates                                                        

      As discussed in the Prospectus,  because the Subordinate  Certificates are
subordinated  to the Senior  Certificates,  the Exemption  will not apply to the
Subordinate Certificates. See "ERISA Considerations--Subordinated  Certificates"
in the Prospectus.                                                              

      Consequently, no transfer of a Subordinate Certificate shall be registered
unless the prospective  transferee provides the Trustee and the Company with (a)
a  certification  to the  effect  that (1) such  transferee  is not an  employee
benefit or other plan or  arrangement  subject to section  406 or section 407 of
ERISA or to section  4975 of the Code;  the  trustee of any such plan;  a person
acting on behalf of any such  plan;  nor a person  using the  assets of any such
plan; or (2) if such transferee is an insurance  company,  it is purchasing such
certificates with funds contained in an "insurance  company general account" (as
such  term is  defined  in  section  V(e) of the  Prohibited  Transaction  Class
Exemption  95-60  ("PTCE  95-60"))  and that the  purchase  and  holding of such
certificates  are  covered  under  Sections I and III of PTCE  95-60;  or (b) an
opinion of counsel (a "benefit plan  opinion")  satisfactory  to the Trustee and
the  Company,  and upon which the Trustee  and the Company  shall be entitled to
rely,  to  the  effect  that  the  purchase  and  holding  of  such  Subordinate
Certificate by the  prospective  transferee will not result in the assets of the
Trust  Fund  being  deemed  to be plan  assets  and  subject  to the  prohibited
transaction  provisions of ERISA or the Code and will not subject the Trustee or
the Company to any  obligation in addition to those  undertaken by such entities
in the  Agreement,  which  benefit plan  opinion  shall not be an expense of the
Trustee or the  Company.  Unless such  certification  or benefit plan opinion is
delivered,  Certificate Owners of the Subordinate Certificates will be deemed to
make the  representations  in clause (a)(1).  See "ERISA  Considerations" in the
Prospectus.                                                                     

 LEGAL INVESTMENT CONSIDERATIONS

      The Class II A-1 and Class II B-1 Certificates  will constitute  "mortgage
related  securities" under the Secondary Mortgage Market Enhancement Act of 1984
and, as such,  will be "legal  investments"  for certain types of  institutional
investors to the extent provided in the Act.                                    

      The  Group I  Certificates  and the  Class II B-2,  Class II B-3 and Class
IIB-4 Certificates (the "Non-SMMEA  Certificates") will not constitute "mortgage
related securities" under the Secondary Mortgage Market Enhancement Act of 1984.
The appropriate  characterization  of the Non-SMMEA  Certificates  under various
legal  investment  restrictions,  and thus the ability of  investors  subject to
these  restrictions  to  purchase  Non-SMMEA  Certificates,  may be  subject  to
significant interpretive uncertainties. All investors whose investment authority
is subject to legal  restrictions  should  consult  their own legal  advisors to
determine  whether,  and  to  what  extent,  the  Non-SMMEA   Certificates  will
constitute legal investments for them.                                          

      The Company makes no representations as to the proper  characterization of
the  Non-SMMEA  Certificates  for  legal  investment  or  financial  institution
regulatory  purposes,  or as to the ability of particular  investors to purchase
Non-SMMEA  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  Non-SMMEA  Certificates)  may  adversely  affect  the  liquidity  of the
Non-SMMEA Certificates. See "Legal Investment Considerations" in the Prospectus.

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CERTIFICATE RATING

      It is a condition to the issuance of each Class of Certificates  that they
be rated by both Moody's  Investors  Service  ("Moody's")  and Fitch IBCA,  Inc.
("Fitch"  and,  together  with  Moody's,  the  "Rating  Agencies")  the  ratings
specified in "Summary  Information."  The Company has not  requested a rating on
the  Certificates  by any rating  agency other than  Moody's or Fitch.  However,
there can be no assurance  as to whether any other  rating  agency will rate the
Certificates,  or if it does,  what  rating  would be assigned by any such other
rating  agency.  A rating on any or all of the  Certificates  by  certain  other
rating  agencies,  if assigned at all, may be lower than the ratings assigned to
such  Certificates  by the the  Rating  Agencies.  A  security  rating  is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal  at any  time.  The  rating  of the  Class  I B-2  and  Class  II B-4
Certificates is based in part on an assessment of CHI's ability to make payments
under the  Limited  Guarantee.  Any change in Moody's or Fitch's  assessment  of
CHI's  ability to make  payments  under the  Limited  Guarantee  may result in a
reduction of the rating of the Class I B-2 and Class II B-4 Certificates.       

UNDERWRITING

      Each of the  Underwriters has severally  agreed,  subject to the terms and
conditions  of the  Underwriting  Agreement,  to  purchase  from the Company the
respective  principal amounts of the Offered Certificates set forth opposite its
name below.                                                                     

                                                        [Enlarge/Download Table]

                                               Principal     Principal     Principal    Principal      Principal    
                                               Amount of     Amount of     Amount of    Amount of      Amount of    
                                              Class I A-1  Class  I A-2     Class I    A-3 Class I   A-4 Class I A-5
                 Underwriter                 Certificates  Certificates  Certificates Certificates  Certificates    
------------------------------------------------------------------------------------------------------------------  
                                                                                                                    
Prudential Securities Incorporated ........   $27,950,000  $20,150,000   $16,900,000  $16,564,000    $4,532,000     
Banc of America Securities llc ............    15,050,000   10,850,000     9,100,000    8,919,000     2,440,000     
                                              -----------   ----------   -----------   ----------    ----------     
    Total .................................   $43,000,000  $31,000,000   $26,000,000  $25,483,000    $6,972,000     


                                                        [Enlarge/Download Table]


                                 Principal     Principal     Principal     Principal      Principal      Principal  
                                 Amount of     Amount of     Amount of     Amount of      Amount of      Amount of  
                                Class I M-1   Class I B-1  Class II A-1   Class II B-1   Class II B-2   Class II B-3
Underwriter                    Certificates   Certificates Certificates   Certificates   Certificates   Certificates
------------------------------------------------------------------------------------------------------------------  
                                                                                                                    
Prudential Securities                                                                                               
   Incorporated ..............  $4,029,000     $4,029,000   $65,340,000    $8,598,000     $2,580,000      $3,440,000
Banc of America                                                                                                     
   Securities llc ............   2,168,000      2,168,000    35,182,000     4,629,000      1,389,000       1,851,000
                               -----------     ----------   -----------    ----------     ----------      ----------
  Total ......................  $6,197,000   $6,197,000  $100,522,000   $13,227,000     $3,969,000        $5,291,000


      In the Underwriting  Agreement,  the Underwriters have agreed,  subject to
the terms and  conditions  set forth  therein,  to  purchase  all of the Offered
Certificates  offered hereby if any Offered  Certificates are purchased.  In the
event of default by an Underwriter, the Underwriting Agreement provides that, in
certain circumstances, the Underwriting Agreement may be terminated.            

      The Company has been advised that the  Underwriters  propose  initially to
offer the Offered  Certificates  to certain  dealers at the respective  offering
prices set forth on the cover page less a selling  concession  not to exceed the
percentage  of the  Certificate  denomination  set  forth  below,  and  that the
Underwriters  may allow and such dealers may reallow a reallowance  discount not
to exceed the percentage of the Certificate denomination set forth below:       

                                                      Selling        Reallowance
     Class of Certificate                          Concession       Concession
     --------------------                          ----------       ----------
   Class I A-1 Certificates ..................    0.2000%          0.1000%
   Class I A-2 Certificates ..................    0.2500%          0.1250%
   Class I A-3 Certificates ..................    0.3000%          0.1500%
   Class I A-4 Certificates ..................    0.4100%          0.2050%
   Class I A-5 Certificates ..................    0.5500%          0.2750%
   Class I M-1 Certificates ..................    0.6500%          0.3250%
   Class I B-1 Certificates ..................    0.7500%          0.3750%
   Class II A-1 Certificates .................    0.2550%          0.1275%
   Class II B-1 Certificates .................    0.5750%          0.2875%
   Class II B-2 Certificates .................    0.6750%          0.3375%
   Class II B-3 Certificates .................    0.7500%          0.3750%

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      Until the distribution of the Offered Certificates is completed,  rules of
the Commission  may limit the ability of the  Underwriters  and certain  selling
group members to bid for and purchase the Offered Certificates.  As an exception
to these rules, the Underwriters are permitted to engage in certain transactions
that stabilize the price of the Offered Certificates.  Such transactions consist
of bids or purchases for the purpose of pegging, fixing or maintaining the price
of the Offered Certificates.                                                    

      In general, purchases of a security for the purpose of stabilization or to
reduce a short  position could cause the price of the security to be higher than
it might be in the absence of such purchases.                                   

      Neither the Company nor any of the Underwriters  makes any  representation
or  prediction  as to  the  direction  or  magnitude  of  any  effect  that  the
transactions described above may have on the prices of the Offered Certificates.
In  addition,  neither  the  Company  nor  any of  the  Underwriters  makes  any
representation  that the Underwriters  will engage in such  transactions or that
such transactions, once commenced, will not be discontinued without notice.     

      After the initial public offering of the Offered Certificates,  the public
      offering  price  and such  concessions  may be  changed.  Pursuant  to the
      Underwriting   Agreement,   the  Company  has  agreed  to  indemnify   the
Underwriters against certain liabilities,                           

including civil  liabilities under the Securities Act, or contribute to payments
which the Underwriters may require to make in respect thereof.                  

      The  Company has agreed that for a period of 30 days from the date of this
Prospectus  Supplement it will not offer or sell publicly any other manufactured
housing contract pass-through certificates without the Underwriters' consent.   

 LEGAL MATTERS

      The  validity  of the  Offered  Certificates  will be passed  upon for the
Company by Boult, Cummings, Conners & Berry, PLC, Nashville,  Tennessee. Certain
legal matters will be passed upon for the  Underwriters by Brown & Wood LLP, New
York, New York.  The material  federal  income tax  consequences  of the Offered
Certificates will be passed upon for the Company by Brown & Wood LLP.           

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Index of Defined Terms

                                                                          Page
                                                                          ----
21st Century........................................................        S-15
21st Century Contracts..............................................        S-15
Accelerated Principal Payment.......................................        S-63
Access Financial Contracts..........................................        S-27
Agreement...........................................................        S-15
Alternate Credit Enhancement........................................        S-68
APR.................................................................   S-5, S-16
Average Sixty-Day Delinquency Ratio.................................        S-61
Average Thirty-Day Delinquency Ratio................................        S-61
beneficial owner....................................................        S-72
benefit plan opinion................................................        S-79
Bi-weekly Contracts.................................................        S-16
Book-Entry Certificates.............................................  S-13, S-72
brokerage firm......................................................        S-52
Call Option Date....................................................        S-53
Carryover Interest Distribution Amount..............................        S-53
Cedel ..............................................................        S-72
Cedel Participants..................................................        S-74
Certificate Owners..................................................        S-72
Certificateholder...................................................        S-72
Change Date.........................................................        S-21
CHI.................................................................         S-4
Class ..............................................................        S-50
Class A Certificateholder...........................................        S-77
Class I A Percentage................................................        S-60
Class I A Principal Balance.........................................        S-60
Class I A-1 Certificates............................................        S-50
Class I A-1 Remittance Rate.........................................        S-53
Class I A-2 Certificates............................................        S-50
Class I A-2 Remittance Rate.........................................        S-53
Class I A-3 Certificates............................................        S-50
Class I A-3 Remittance Rate.........................................        S-53
Class I A-4 Certificates............................................        S-50
Class I A-4 Remittance Rate.........................................        S-53
Class I A-5 Certificates............................................        S-50
Class I A-5 Remittance Rate.........................................        S-53
Class I B Percentage................................................        S-61
Class I B Principal Balance.........................................        S-60
Class I B-1 Certificates............................................        S-50
Class I B-1 Remittance Rate.........................................        S-53
Class I B-2 Certificates............................................        S-50
Class I B-2 Distribution Amount.....................................        S-68
Class I B-2 Floor Amount............................................        S-56
Class I B-2 Principal Liquidation Loss Amount.......................        S-68
Class I B-2 Remittance Rate.........................................        S-53
Class I M-1 and Class I B Principal Distribution Test...............        S-59
Class I M-1 Certificates............................................        S-50
Class I M-1 Percentage..............................................        S-60
Class I M-1 Remittance Rate.........................................        S-53
Class II A Percentage...............................................        S-61
Class II A-1 Certificates...........................................        S-50
Class II A-1 Formula Rate...........................................        S-53
Class II A-1 Net Funds Cap Carryover Amount.........................        S-61
Class II A-1 Remittance Rate........................................        S-53
Class II B Percentage ..............................................        S-61
Class II B Principal Balance........................................        S-60
Class II B Principal Distribution Test..............................        S-59
Class II B-1 Certificates...........................................        S-50
Class II B-1 Formula Rate...........................................        S-54
Class II B-1 Net Funds Cap Carryover Amount.........................        S-61
Class II B-1 Remittance Rate........................................        S-53
Class II B-2 Certificates...........................................        S-50

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                                                                          Page
                                                                          ----
Class II B-2 Formula Rate...........................................        S-54
Class II B-2 Net Funds Cap Carryover Amount.........................        S-62
Class II B-2 Remittance Rate........................................        S-53
Class II B-3 Certificates...........................................        S-50
Class II B-3 Formula Rate...........................................        S-54
Class II B-3 Net Funds Cap Carryover Amount.........................        S-62
Class II B-3 Remittance Rate........................................        S-53
Class II B-4 Certificates...........................................        S-50
Class II B-4 Distribution Amount....................................        S-68
Class II B-4 Formula Rate...........................................        S-54
Class II B-4 Net Funds Cap Carryover Amount.........................        S-62
Class II B-4 Principal Liquidation Loss Amount......................        S-69
Class II B-4 Remittance Rate........................................        S-53
Class R Certificate.................................................        S-50
Closing Date........................................................         S-4
Code................................................................        S-79
Commission..........................................................        S-50
Company.............................................................        S-15
Contract Pool.......................................................        S-15
Contracts...........................................................   S-4, S-15
Cooperative.........................................................        S-74
Cumulative Realized Losses..........................................        S-60
Current Realized Loss Ratio.........................................        S-60
Cut-off Date........................................................   S-4, S-15
Cut-off Date Pool Principal Balance.................................        S-15
Deficiency Event....................................................        S-59
Definitive Certificate..............................................        S-72
Designations........................................................         S-4
Determination Date..................................................        S-51
DTC.................................................................   S-72, I-1
DTC Services........................................................        S-75
Due Date............................................................        S-17
Due Period..........................................................        S-52
Eligible Institution................................................        S-51
Enhancement Payment.................................................  S-68, S-69
ERISA...............................................................        S-78
Escalating Principal Payment Contracts..............................        S-16
Euroclear Operator..................................................        S-74
Euroclear Participants..............................................        S-74
European Depositaries...............................................        S-72
Excess Overcollateralization Amount.................................        S-63
FDIC................................................................        S-51
Financial Intermediary..............................................        S-72
Fitch...............................................................        S-80
Fixed Rate Certificates.............................................         S-4
Floating Rate Certificates..........................................         S-4
Foreign Investors...................................................        S-77
Formula Principal Distribution Amount...............................        S-61
Global Securities...................................................         I-1
Gross Margin........................................................        S-21
Group...............................................................        S-50
Group I Available Distribution Amount...............................        S-51
Group I Available Funds Shortfall...................................        S-60
Group I Certificate Account.........................................        S-50
Group I Certificates................................................   S-4, S-50
Group I Contracts...................................................   S-4, S-50
Group I Cut-off Date Principal Balance..............................        S-17
Group I Monthly Excess Spread.......................................        S-60
Group I Monthly Servicing Fee.......................................        S-55
Group I Performance Tests...........................................        S-59
Group I Pool Scheduled Principal Balance............................        S-62
Group I Senior Certificates.........................................         S-4
Group I Subordinate Certificates....................................         S-4
Group I Weighted Average Net Contract Rate..........................        S-54

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Group II Available Distribution Amount..............................        S-51
Group II Available Funds Shortfall..................................        S-60
Group II Certificate Account........................................        S-50
Group II Certificate Floor Amount...................................        S-58
Group II Certificates...............................................   S-4, S-50
Group II Contracts..................................................   S-4, S-50
Group II Cut-off Date Principal Balance.............................        S-21
Group II Monthly Excess Spread......................................  S-60, S-63
Group II Monthly Servicing Fee......................................        S-57
Group II Performance Tests..........................................        S-60
Group II Pool Scheduled Principal Balance...........................        S-62
Group II Senior Certificates........................................         S-4
Group II Subordinate Certificates...................................         S-4
IML.................................................................        S-74
Index...............................................................        S-21
indirect participating firm.........................................        S-52
Industry............................................................        S-75
Initial Class I B-2 Principal Remittance Date.......................        S-68
Initial Class II B-4 Principal Remittance Date......................        S-68
Initial Remittance Rates............................................        S-53
Initial Required Overcollateralization Amount.......................        S-63
Interest Distribution Amount........................................        S-53
Interest Period.....................................................        S-52
Land-and-Home Contracts.............................................        S-15
LIBOR...............................................................        S-53
LIBOR Business Day..................................................        S-54
Lifetime Cap........................................................        S-21
Lifetime Floor......................................................        S-21
Limited Guarantee...................................................        S-68
Liquidated Contract.................................................  S-62, S-67
lookback date.......................................................        S-21
Manufactured Homes..................................................        S-15
Manufactured Housing Contracts......................................        S-15
Monthly Advances....................................................        S-69
Moody's.............................................................        S-80
Mortgage Loans......................................................        S-15
Mortgaged Properties................................................        S-15
Net Funds Cap ......................................................        S-54
Net Funds Cap Carryover Amount......................................        S-62
New Regulations.....................................................        S-78
Non-SMMEA Certificates..............................................        S-79
Offered Certificates................................................         S-4
Overcollateralization...............................................        S-63
Overcollateralization Amount........................................        S-63
Overcollateralization Reduction Amount..............................        S-63
Percentage Interest.................................................        S-50
Periodic Cap........................................................        S-21
Plans...............................................................        S-78
Pool Scheduled Principal Balance....................................        S-62
portfolio debt investments..........................................        S-78
prepayment..........................................................        S-33
Prepayment Model....................................................        S-33
Principal Balance...................................................        S-60
PTCE 95-60..........................................................        S-79
Rating Agencies.....................................................        S-80
Record Date.........................................................        S-51
Relevant Depositary.................................................        S-72
REMIC...............................................................        S-76
Remittance Date.....................................................   S-4, S-50
Required Class II B Payment.........................................        S-61
Rules...............................................................        S-73
Scheduled Principal Balance.........................................        S-62
Seller..............................................................         S-4
Semi-Monthly Contracts..............................................        S-16

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Senior Certificates.................................................         S-4
Servicer............................................................         S-4
SMMEA...............................................................  S-10, S-13
Subordinate Certificates............................................         S-4
Systems.............................................................        S-75
Telerate Screen Page 3750...........................................        S-54
Terms and Conditions................................................        S-74
Trustee.............................................................         S-4
Trust Fund..........................................................   S-4, S-50
Underwriters........................................................        S-78
U.S. Person.........................................................         I-3
Value...............................................................        S-17
Vanderbilt..........................................................   S-4, S-15
Weighted Average Lifetime Cap.......................................        S-61
Year 2000 problems..................................................        S-75

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 ANNEX I

 GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES

      Except in certain limited circumstances, the globally offered Manufactured
Housing Contract Senior/  Subordinate  Pass-Through  Certificates,  Series 1999D
(the "Global  Securities") will be available only in book-entry form.  Investors
in the Global  Securities  may hold such  Global  Securities  through any of The
Depository Trust Company ("DTC"), Cedel or Euroclear. The Global Securities will
be tradeable as home market  instruments in both the European and U.S.  domestic
markets.  Initial  settlement  and all secondary  trades will settle in same-day
funds.                                                                          

      Secondary  market trading  between  investors  holding  Global  Securities
through Cedel and Euroclear  will be conducted in the ordinary way in accordance
with  their  normal  rules  and  operating  procedures  and in  accordance  with
conventional eurobond practice (i.e., seven calendar day settlement).           

      Secondary  market trading  between  investors  holding  Global  Securities
through DTC will be conducted  according to the rules and procedures  applicable
to U.S. corporate debt obligations.                                             

      Secondary   cross-market  trading  between  Cedel  or  Euroclear  and  DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis  through  the  respective  Depositaries  of Cedel and  Euroclear  (in such
capacity) and as DTC Participants.                                              

      Non-U.S. holders (as described below) of Global Securities will be subject
to U.S.  withholding  taxes unless such holders  meet certain  requirements  and
deliver appropriate U.S. tax documents to the securities clearing  organizations
or their participants.                                                          

Initial Settlement                                                              

      All Global  Securities  will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC.  Investors'  interests in the Global Securities
will be represented  through  financial  institutions  acting on their behalf as
direct and indirect  Participants in DTC. As a result,  Cedel and Euroclear will
hold  positions  on  behalf  of  their  participants  through  their  respective
Depositaries,  which  in turn  will  hold  such  positions  in  accounts  as DTC
Participants.                                                                   

      Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional eurobonds, except that there
will be no temporary  global  security and no  "lock-up" or  restricted  period.
Investor  securities  custody  accounts  will be  credited  with their  holdings
against payment in same-day funds on the settlement date.                       

      Investors  electing  to hold  their  Global  Securities  through  Cedel or
Euroclear  accounts  will  follow  the  settlement   procedures   applicable  to
conventional  eurobonds,  except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities  custody  accounts on the settlement date against payment in same-day
funds.                                                                          

Secondary Market Trading                                                        

      Since the purchaser  determines the place of delivery,  it is important to
establish  at the time of the trade  where  both the  purchaser's  and  seller's
accounts are located to ensure that  settlement can be made on the desired value
date.                                                                           

      Trading  between DTC  Participants.  Secondary  market trading between DTC
Participants   will  be  settled  using  the  procedures   applicable  to  prior
manufactured  housing  contract  pass-through  certificates  issues in  same-day
funds.                                                                          

      Trading  between Cedel and/or  Euroclear  Participants.  Secondary  market
trading  between Cedel  Participants or Euroclear  Participants  will be settled
using the procedures applicable to conventional eurobonds in same-day funds.    

      Trading between DTC seller and Cedel or Euroclear  purchaser.  When Global
Securities  are to be transferred  from the account of a DTC  Participant to the
account of a Cedel  Participant or a Euroclear  Participant,  the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant  at least one business day prior to  settlement.  Cedel or Euroclear
will  instruct  the  respective  Depositary,  as the case may be, to receive the
Global Securities against payment.  Payment will include interest accrued on the
Global  Securities  from and                                                    

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including the last coupon payment date to and excluding the settlement  date, on
the basis of the actual number of days in such accrual period and a year assumed
to  consist of 360 days.  For  transactions  settling  on the 31st of the month,
payment  will include  interest  accrued to and  excluding  the first day of the
following month.  Payment will then be made by the respective  Depositary of the
DTC  Participant's  account  against  delivery of the Global  Securities.  After
settlement has been completed,  the Global  Securities will be system and by the
clearing  system,  in  accordance  with  its  usual  procedures,  to  the  Cedel
Participant's or Euroclear  Participant's  account.  The securities  credit will
appear the next day (European  time) and the cash debt will be  back-valued  to,
and the  interest  on the Global  Securities  will accrue  from,  the value date
(which would be the  preceding  day when  settlement  occurred in New York).  If
settlement is not completed on the intended value date (i.e.,  the trade fails),
the  Cedel or  Euroclear  cash  debt will be  valued  instead  as of the  actual
settlement date.                                                                

      Cedel Participants and Euroclear  Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement.  The most  direct  means of doing  so is to  preposition  funds  for
settlement,  either from cash on hand or existing lines of credit, as they would
for any  settlement  occurring  within Cedel or Euroclear.  Under this approach,
they  may  take on  credit  exposure  to Cedel or  Euroclear  until  the  Global
Securities are credited to their accounts one day later.                        

      As an alternative,  if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear  Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement.  Under
this procedure,  Cedel Participants or Euroclear Participants  purchasing Global
Securities would incur overdraft  charges for one day, assuming they cleared the
overdraft when the Global  Securities were credited to their accounts.  However,
interest on the Global  Securities would accrue from the value date.  Therefore,
in many cases the investment  income on the Global Securities earned during that
one-day period may  substantially  reduce or offset the amount of such overdraft
charges,  although  this  result  will  depend on each  Cedel  Participant's  or
Euroclear Participant's particular cost of funds.                               

      Since the settlement is taking place during New York business  hours,  DTC
Participants can employ their usual procedures for sending Global  Securities to
the  respective  European  Depositary for the benefit of Cedel  Participants  or
Euroclear Participants. The sale proceeds will be available to the DTC seller on
the settlement date.  Thus, to the DTC  Participants a cross-market  transaction
will settle no differently than a trade between two DTC Participants.           

      Trading between Cedel or Euroclear  Seller and DTC Purchaser.  Due to time
zone differences in their favor, Cedel  Participants and Euroclear  Participants
may  employ  their  customary   procedures  for  transactions  in  which  Global
Securities are to be transferred by the respective clearing system,  through the
respective Depositary,  to a DTC Participant.  The seller will send instructions
to Cedel or Euroclear  through a Cedel  Participant or Euroclear  Participant at
least one  business day prior to  settlement.  In these cases Cedel or Euroclear
will instruct the respective Depositary,  as appropriate,  to deliver the Global
Securities  to the DTC  Participant's  account  against  payment.  Payment  will
include  interest  accrued on the Global  Securities from and including the last
coupon payment to and excluding the  settlement  date on the basis of the actual
number of days in such accrual period and a year assumed to consist of 360 days.
For  transactions  settling  on the  31st of the  month,  payment  will  include
interest  accrued to and  excluding the first day of the  following  month.  The
payment  will then be  reflected  in the  account  of the Cedel  Participant  or
Euroclear Participant the following day, and receipt of the cash proceeds in the
Cedel Participant's or Euroclear  Participant's  account would be back-valued to
the value date (which would be the preceding  day, when  settlement  occurred in
New York). Should the Cedel Participant or Euroclear  Participant have a line of
credit  with  its  respective  clearing  system  and  elect  to  be in  debt  in
anticipation of receipt of the sale proceeds in its account,  the back-valuation
will extinguish any overdraft  incurred over that one-day period.  If settlement
is not completed on the intended value date (i.e., the trade fails),  receipt of
the cash proceeds in the Cedel Participant's or Euroclear  Participant's account
would instead be valued as of the actual settlement date.                       

      Finally,  day traders that use Cedel or Euroclear and that purchase Global
Securities from DTC Participants for delivery to Cedel Participants or Euroclear
Participants  should note that these trades would automatically fail on the sale
side unless  affirmative  action were taken. At least three techniques should be
readily available to eliminate this potential problem:                          

           (a)  borrowing  through  Cedel or  Euroclear  for one day  (until the
      purchase  side of the day trade is  reflected  in their Cedel or Euroclear
    accounts) in accordance with the clearing system's customary procedures;

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           (b)  borrowing  the  Global   Securities  in  the  U.S.  from  a  DTC
      Participant  no later than one day prior to  settlement,  which would give
      the Global  Securities  sufficient  time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or 

           (c)  staggering  the value  dates  for the buy and sell  sides of the
      trade so that the value date for the purchase from the DTC  Participant is
      at least  one day  prior  to the  value  date  for the  sale to the  Cedel
Participant or Euroclear Participant.                               

Certain U.S. Federal Income Tax Documentation Requirements                      

      A beneficial owner of Global Securities  holding  securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest  (including  original issue discount) on registered debt issued by U.S.
Persons,  unless (i) each clearing system,  bank or other financial  institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii)  such  beneficial  owner  takes  one of the  following  steps to  obtain an
exemption or reduced tax rate:                                                  

      Exemption  for non-U.S.  Persons (Form W-8).  Beneficial  owners of Global
Securities  that are non-U.S.  Persons can obtain a complete  exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status).  If
the information  shown on Form W-8 changes,  a new Form W-8 must be filed within
30 days of such change.                                                         

      Exemption for non-U.S.  Persons with  effectively  connected  income (Form
4224). A non-U.S. Person,  including a non-U.S.  corporation or bank with a U.S.
branch, for which the interest income is effectively  connected with its conduct
of a trade or business in the United  States,  can obtain an exemption  from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively  Connected  with the  Conduct of a Trade or  Business  in the United
States).                                                                        

      Exemption  or  reduced  rate  for  non-U.S.  Persons  resident  in  treaty
countries (Form 1001). Non-U.S.  Persons that are Certificate Owners residing in
a country  that has a tax treaty with the United  States can obtain an exemption
or  reduced  tax rate  (depending  on the  treaty  terms)  by  filing  Form 1001
(Ownership,  Exemption or Reduced Rate Certificate). If the treaty provides only
for a reduced  rate,  withholding  tax will be imposed  at that rate  unless the
filer  alternatively  files Form W-8. Form 1001 may be filed by the  Certificate
Owners or his agent.                                                            

      Exemption for U.S.  Persons (Form W-9). U.S. Persons can obtain a complete
exemption  from the  withholding  tax by filing  Form W-9  (Payer's  Request for
Taxpayer Identification Number and Certification).                              

      U.S. Federal Income Tax Reporting  Procedure.  The Certificate  Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer,  his agent,
files by submitting  the  appropriate  form to the person  through whom it holds
(the clearing  agency,  in the case of persons holding  directly on the books of
the clearing  agency).  Form W-8 and Form 1001 are effective for three  calendar
years and Form 4224 is effective for one calendar year.                         

      The term  "U.S.  Person"  means (i) a citizen  or  resident  of the United
States, (ii) a corporation, partnership or other entity treated as a corporation
or partnership  for United States  federal  income tax purposes  organized in or
under the laws of the  United  States or any state  thereof or the  District  of
Columbia or (iii) an estate the income of which is  includible  in gross  income
for United States tax purposes,  regardless of its source,  or (iv) 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 authority
to control all  substantial  decisions of the trust.  This summary does not deal
with all aspects of U.S.  Federal income tax withholding that may be relevant to
foreign holders of the Global Securities. Investors are advised to consult their
own tax advisors for specific tax advice  concerning their holding and disposing
of the Global Securities.                                                       

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Prospectus                                                                      

 Vanderbilt Mortgage and Finance, Inc.
 Seller and Servicer

 Manufactured Housing Contract Pass-Through Certificates
(Issuable in Series)

You should consider the risk factors starting on page 4 of this prospectus. 

  The certificates will represent  obligations of the related trust and will not
  represent any interest in or  obligation  of Vanderbilt  Mortgage and Finance,
  Inc. or, unless specified in the prospectus  supplement  relating to a series,
  any of its affiliates.  The Certificates  will not be insured or guaranteed by
  any governmental agency or instrumentality. This prospectus may not be used to
  offer or sell any certificates  unless accompanied by a prospectus  supplement
relating to that series.                                                    

      We  are  offering  certificates  representing  primarily  an  interest  in
manufactured  housing  contracts as further  specified in this  prospectus and a
prospectus  supplement.  Vanderbilt  Mortgage  and  Finance,  Inc.  or a limited
purpose finance subsidiary of Vanderbilt Mortgage and Finance,  Inc. will form a
trust for each  separate  series of  certificates,  and the trust will issue the
certificates  of that  series.  The  certificates  of any series may  consist of
several different classes. A trust may also issue one or more other interests in
the  trust  that will not be  offered  under  this  prospectus  and the  related
prospectus supplement.                                                          

      The  right of each  class of  certificates  within  a  series  to  receive
payments may be senior or  subordinate to the rights of one or more of the other
classes of certificates.  In addition,  a series of certificates may include one
or more classes which on the one hand are subordinated to one or more classes of
certificates,  while on the  other  hand are  senior to one or more  classes  of
certificates. The rate of principal and interest payments on the certificates of
any class will depend on the  priority of payment of that class and the rate and
timing of payments of the related contracts.                                    

      The prospectus  supplement  will list the remittance  rate that holders of
certificates  will  receive  for  each  class  in that  series.  The  prospectus
supplement will specify  whether the remittance rate will be fixed,  variable or
adjustable.                                                                     

      Before the offering of the certificates  under this prospectus,  there was
no public market for the certificates.  The underwriters named in the prospectus
supplement  relating to a series may from time to time buy and sell certificates
of that series.                                                                 

----------------------------- 

      Neither the  Securities and Exchange  Commission nor any state  securities
commission has approved or disapproved of these securities or determined if this
prospectus  is truthful or  complete.  Any  representation  to the contrary is a
criminal offense.                                                               

----------------------------- 

November 23, 1999                                                               

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IMPORTANT NOTICE ABOUT INFORMATION IN THIS
 PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT

      We  tell  you  about  the  certificates  in two  separate  documents  that
progressively  provide more detail: (a) this prospectus,  which provides general
information, some of which may not apply to a particular series of certificates,
including  your  series;  and  (b)  the  prospectus  supplement  related  to the
particular terms of your series of certificates.                                

      If the terms of your series of  certificates  described in the  prospectus
supplement  varies from this  prospectus,  you should rely on the information in
your prospectus supplement.                                                     

      You should  rely only on the  information  contained  in this  document or
information  to which we have  referred  you. We have not  authorized  anyone to
provide you with information  that is different.  This document may only be used
where it is legal to sell these securities. The information in this document may
only be accurate on the date of this document.                                  

REPORTS TO HOLDERS OF THE CERTIFICATES

      We will  provide to the holders of  certificates  of each  series  certain
monthly and annual  reports  concerning the  certificates  and the related trust
fund. For a more complete  description  of the reports you will receive,  please
read the  section  entitled  "Description  of the  Certificates  --  Reports  to
Certificateholders" in the prospectus supplement relating to your series.       

 WHERE YOU CAN FIND MORE INFORMATION

      Federal securities law requires the filing of certain information with the
Securities  and Exchange  Commission,  including  annual,  quarterly and special
reports,  proxy  statements  and  other  information.  Vanderbilt  Mortgage  and
Finance,  Inc. and Clayton Homes, Inc. have filed a registration  statement with
the  Securities  and Exchange  Commission  under the  Securities Act of 1933, as
amended.  You can read and copy  the  registration  statement,  as well as other
filed documents,  at the Securities and Exchange  Commission's  public reference
facilities located at Judiciary Plaza, 450 Fifth Street, N.W., Washington,  D.C.
20549.  You may obtain  information  on the  operation  of the public  reference
facilities by calling the Securities and Exchange  Commission at 1-800-SEC-0330.
You may  also  visit  the  Securities  and  Exchange  Commission's  web  site at
http://www.sec.gov to access available filings.                                 

      Clayton Homes,  Inc. has securities other than the certificates  listed on
the New York Stock  Exchange.  You may  inspect  reports  and other  information
concerning those securities at the New York Stock Exchange.                     

      The  Securities  and  Exchange  Commission  allows us to  "incorporate  by
reference"  some of the  information  we file with it,  which  means that we can
disclose important  information to you by referring you to those documents.  The
information  that we  incorporate  by reference is considered to be part of this
prospectus,  and later information that we file with the Securities and Exchange
Commission  will  automatically  update and  supersede  this  information.  With
respect to any class of certificates that is supported by a guarantee of Clayton
Homes, Inc., we are incorporating by reference the following documents into this
prospectus and the related prospectus supplement:                               

      o     Clayton Homes,  Inc.'s Annual Report on Form 10-K for the year ended
June 30, 1999; and                                      

      o     Clayton  Homes,  Inc.'s  Quarterly  Reports  on  Form  10-Q  for the
        quarterly periods ending March 31, 1999, and September 30, 1999.

      We are also  incorporating  by  reference  into  this  prospectus  and the
related prospectus supplement:                                                  

      o     any document filed by Vanderbilt Mortgage and Finance, Inc. pursuant
            to Section 13(a),  13(c), 14 or 15(d) of the Securities and Exchange
            Act of 1934, as amended, after the date of this prospectus and prior
            to the  termination  of the offering of the  certificates  issued by
that trust; and                                         

      o     any document:  (i) that relates to a class of certificates supported
            by a  guarantee  of Clayton  Homes,  Inc.  and (ii) that is filed by
            Clayton Homes, Inc. pursuant to Section 13(a), 13(c), 14 or 15(d) of
            the Securities and Exchange Act of 1934, as amended,  after the date
            of this  prospectus and prior to the  termination of the offering of
the certificates issued by that trust.                  

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      We will provide to you, upon your written or oral request, without charge,
a  copy  of  any or all of the  documents  incorporated  by  reference  in  this
prospectus  (other than certain exhibits to such documents).  Please direct your
requests for copies of documents filed by Vanderbilt Mortgage and Finance,  Inc.
to its  principal  executive  office at 500 Alcoa  Trail,  Maryville,  Tennessee
37804,  Attention:  David Jordan,  Secretary,  telephone number: (423) 380-3515.
Please direct your requests for copies of documents filed by Clayton Homes, Inc.
to its principal  executive  office at 5000 Clayton Road,  Maryville,  Tennessee
37804, Attention: Kevin T. Clayton, President, telephone number: (423) 380-3000.

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RISK FACTORS

      You should  consider the  following  risk  factors in deciding  whether to
purchase the  certificates.  You should also consider the risk factors described
in your prospectus supplement.                                                  

The contracts may have higher than expected delinquencies, defaults or losses.  

      Your investment in the  certificates  may be affected by various  factors,
including:                                                                      

      General  Economic  Conditions.  Downturns  in regional  or local  economic
conditions  historically have caused increased delinquency,  defaults and losses
on manufactured  housing  contracts.  An economic downturn in any region where a
number  of  the  obligors  on the  contracts  are  located  might  cause  higher
delinquencies,  defaults and losses on the contracts. If delinquencies, defaults
or losses on the contracts are higher than expected,  you could suffer a loss on
your investment.                                                                

      Depreciation in Value of Manufactured Homes. A manufactured home generally
depreciates over time. As a result,  the market value of a manufactured home may
decline faster than the outstanding principal balance of the loan for that home.
If the value of the  manufactured  homes securing the contracts  declines faster
than expected, then defaults and losses on the contracts may rise. If the losses
on the  contracts  are not  covered  by the  subordination  of other  classes of
certificates,  or by another form of credit  enhancement,  you will bear all the
risk of loss of default by obligors and will need to look primarily to the value
of the manufactured  home. The proceeds from the liquidation of any contract and
sale of the  related  manufactured  home  may not be  sufficient  to  cover  the
outstanding principal and unpaid interest on the defaulted contract.            

      Please  review "The Trust Fund -- The Contract  Pools" in this  prospectus
for more detail.                                                                

The contracts may be prepaid before their scheduled maturity.                   

      There is a risk that the  contracts  may be  prepaid in full or in part at
any time before their scheduled maturity due to various factors, such as:       

o  homeowner mobility;                                              

o  general and regional economic conditions;                        

o  competition among manufactured housing lenders; and              

o  prevailing interest rates.                                       

      The prepayment experience on manufactured housing contracts varies greatly
and may affect the average life of the certificates. If a contract is prepaid in
full,  the interest on the contract will accrue only to the date of  prepayment.
If  you  purchase  a  certificate  at a  discount,  then  slower  than  expected
prepayments on the contracts will reduce the yield on your  certificate.  If you
purchase a certificate  at a premium,  then faster than expected  prepayments on
the contracts will reduce the yield on your  certificate.  You should not assume
that the contracts will prepay at any particular rate or at a constant rate.    

      You will also be  subject  to  reinvestment  risk in  connection  with the
average life of your certificates. When prevailing interest rates are lower than
at the time of your  investment,  prepayments  are  likely to  increase  and the
average life of your certificates is likely to decrease. You may only be able to
reinvest the proceeds  from your  certificates  in  investments  of similar risk
bearing a lower rate of interest than your certificates.                        

   The  certificates  are not an obligation of Vanderbilt  Mortgage and Finance,
Inc. and they are not insured.                                                  

      The  certificates  will not  represent an interest in, or  obligation  of,
Vanderbilt  Mortgage  and  Finance,  Inc.  The  certificates  are not insured or
guaranteed by the government, any underwriter,  Vanderbilt Mortgage and Finance,
Inc. or,  unless  specified  in the related  Prospectus  Supplement,  any of its
affiliates, and will be payable only from amounts collected on the contracts.   

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The certificates may have limited liquidity.                                    

      There  is a risk  that  a  secondary  market  will  not  develop  for  the
certificates of any series. There is also a risk that if a secondary market does
develop:                                                                        

      o     it may  not be  sufficiently  liquid  to  allow  you  to  sell  your
            certificates;  and/or  o it may not  continue  for  the  term of any
series of certificates.                                 

Risks relating to enforceability of the contracts.                              

The security interest in the manufactured homes may not be perfected.           

      Every manufactured home contract will be secured by a security interest in
either:                                                             

o     the manufactured home; or                                     

      o     if it is a land-and-home  contract, the mortgage or deed of trust on
           the real estate where the manufactured home is permanently affixed.

      State laws, such as the uniform  commercial code and motor vehicle titling
statutes,  govern the perfection of security interests in manufactured homes and
the  enforcement  of rights to realize upon the value of  manufactured  homes as
collateral  for the  contracts.  The  steps  required  to create  and  perfect a
security interest in a manufactured home vary from state to state.  Certain laws
may also limit the servicer's  ability to repossess,  foreclose or liquidate the
contracts.                                                                      

      Vanderbilt Mortgage and Finance, Inc. will represent and warrant that each
contract is secured by a perfected  security interest in a manufactured home. If
we  materially  breach this  representation  and  warranty  with  respect to any
contract,  we must  repurchase  the contract,  subject to the  conditions of the
Pooling and Servicing Agreement.  Nevertheless, a failure by Vanderbilt Mortgage
and Finance,  Inc. to perfect its security  interest in the  manufactured  homes
securing  a number  of  contracts  could  cause an  increase  in  losses  on the
contracts, and you could suffer a loss on your investment as a result.          

The   security interest in the manufactured  homes may not have been assigned to
the trustee.                                                        

Vanderbilt  Mortgage and Finance,  Inc.  will not:                            

      o     amend a  certificate  of  title to a  manufactured  home to name the
trustee as the lienholder;                              

      o     note the trustee's  interest on the  certificate of title; o deliver
the certificate of title to the trustee; or             

      o     record the  assignment  to the  trustee of the  mortgage  or deed of
trust securing land-and-home  contracts.                

   As a result,  in some states the  assignment of the security  interest in the
manufactured  home, or of the mortgage or deed of trust,  to the trustee may not
be  effective  against  our  creditors  or a  trustee  in  the  event  we  enter
bankruptcy,  or the  security  interest  may  not be  perfected.  If  Vanderbilt
Mortgage  and  Finance,  Inc.  is no longer the  servicer  and the  trustee or a
successor   servicer  is  unable  to  enforce  the  security   interest  in  the
manufactured  home  following a default on a contract,  losses on the  contracts
would increase, and you could suffer a loss on your investment as a result.     

Federal and state consumer protection laws apply to the contracts.              

      If Vanderbilt  Mortgage and Finance,  Inc. or the seller of a manufactured
home did not comply with federal or state consumer  protection laws with respect
to a contract relating to a manufactured  home, the trust fund may be liable for
amounts due under the contracts.                                                

      Vanderbilt Mortgage and Finance, Inc. will represent and warrant that each
contract complies with applicable federal and state consumer protection laws. If
we  materially  breach this  representation  and  warranty  with  respect to any
contract,  we must  repurchase  the contract,  subject to the  conditions of the
Pooling and Servicing Agreement.  Nevertheless, a failure by Vanderbilt Mortgage
and Finance, Inc. to comply with these laws could cause an increase in losses on
the contracts, and you could suffer a loss on your investment as a result.      

      Please review  "Certain Legal Aspects of the Contracts" in this prospectus
for more detail.                                                                

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If Vanderbilt Mortgage and Finance, Inc. becomes insolvent,  there may be delays
or reductions in distributions on your certificates.                            

      Vanderbilt  Mortgage  and  Finance,  Inc.  intends  that each  transfer of
contracts to a trust fund will  constitute  a sale,  rather than a pledge of the
contracts  to secure  indebtedness.  However,  if we  become a debtor  under the
federal  bankruptcy  code,  it is possible  that our  creditors  or a bankruptcy
trustee may argue that the transfer of the  contracts was a pledge rather than a
sale. If this  position is presented to or accepted by a court,  it could result
in a delay in, or reduction of, distributions on your certificates.             

      The case of Octagon Gas Systems,  Inc. v. Rimmer,  995 F.2d 948 (10th Cir.
1993)  contains  language to the effect that  accounts  sold by an entity  which
subsequently  became  bankrupt  remained  property  of the  debtor's  bankruptcy
estate.  Although  most of the  contracts  constitute  chattel paper rather than
accounts under the Uniform  Commercial Code, sales of chattel paper,  like sales
of accounts,  are governed by the same Article 9 of the Uniform Commercial Code.
If  Vanderbilt  Mortgage  and Finance,  Inc.  becomes a debtor under the federal
bankruptcy  code and a court  applies  the  reasoning  of the  Octagon  court to
chattel paper, you could  experience a delay in, or reduction of,  distributions
on your certificates.                                                           

Subordination may not protect holders of senior certificates from losses.       

      If the  rights of your class of  certificates  are senior to the rights of
one or more other classes of certificates:                                      

      o     the protection given to you by subordination  may be depleted due to
certain losses on the contracts; and                    

      o     any reserve fund  established for your series of certificates  could
be depleted in certain circumstances.                   

      In either  case,  shortfalls  could  affect you as well as the  holders of
certificates  subordinate to your class of  certificates.  You should  carefully
review the credit risks to be absorbed by your class of  certificates on account
of subordination or the timing of the distributions  intended to be made on your
class of certificates.                                                          

Tennessee Tax Lien May Have Priority Over the Trust Fund                        

      Under  Tennessee  law,  a  tax  is  due  in  connection  with  the  public
recordation  of instruments  evidencing  indebtedness.  Vanderbilt  Mortgage and
Finance,  Inc.  will treat the transfer of the Contracts to each trust fund as a
sale rather than a loan, and therefore we will not pay any tax in respect of the
recordation of instruments evidencing such transfers. Nonpayment or underpayment
of the Tennessee  indebtedness tax does not affect or impair the  effectiveness,
validity,  priority  or  enforceability  of the  security  interest  created  or
evidenced by the instrument,  but (a) subjects the holder of the indebtedness to
a penalty,  in  addition  to the tax,  in the  amount of the  greater of $250 or
double the unpaid tax due, (b) results in the  imposition of a tax lien in favor
of the Tennessee  Department of Revenue,  in the amount of any tax and penalties
unpaid and owing that  attaches  to the  collateral  until the lien or  security
interest is released and thereafter attaches to the proceeds,  and (c) precludes
the holder of the  indebtedness  from  maintaining an action on the indebtedness
(other than an action limited to the  enforcement  of the security  interests or
lien) against the debtor until the  nonpayment is cured.  In such event,  and in
addition  to  the  statutory  disability  described  above,  collections  on the
contracts could be applied to pay such tax and penalty prior to being applied to
make distributions on your certificates and the Tennessee  Department of Revenue
would have a lien on the contracts prior to the security  interests and liens of
the trust fund.                                                                 

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THE TRUST FUND

General                                                                         

      Each Trust Fund will  include  (i) a Contract  Pool  (which may consist of
sub-pools),  (ii) the amounts held from time to time in trust accounts  (each, a
"Certificate Account") maintained by the Trustee pursuant to the Agreement,  and
(iii) proceeds from certain hazard insurance policies on individual Manufactured
Homes or  Mortgaged  Properties,  if any,  and  Manufactured  Homes  acquired by
repossession,  (iv) any letter of credit,  limited  guarantee of Clayton  Homes,
Inc. ("CHI"), surety bond, pool insurance policy, cash reserve fund or any other
form of credit  enhancement,  or any  combination  thereof,  and (v) such  other
property  as may  be  specified  in the  related  Prospectus  Supplement.  If so
specified in the related Prospectus  Supplement,  a limited guarantee of CHI may
exist and may not be a part of the Trust Fund.                                  

      Each  Certificate  will  evidence  the  interest  specified in the related
Prospectus Supplement in one Trust Fund, containing one Contract Pool (which may
consist of  sub-pools)  comprised of Contracts  having the  aggregate  principal
balance as of the  specified  day of the month of the  creation of the pool (the
"Cut-off  Date")  specified  in the related  Prospectus  Supplement.  Holders of
Certificates of a Series will have interests only in such Contract Pool and will
have no interest in the  Contract  Pool created with respect to any other Series
of Certificates.                                                                

      All of the Contracts will have been  originated or purchased by Vanderbilt
Mortgage and Finance,  Inc.  ("Vanderbilt") or an affiliate of Vanderbilt in the
open market or in privately negotiated transactions, including transactions with
affiliates of Vanderbilt.  The following is a brief description of the Contracts
expected to be included in the Trust Fund. Specific  information  respecting the
Contracts will be provided in the  Prospectus  Supplement or in a report on Form
8-K to be filed with the  Securities and Exchange  Commission  after the initial
issuance of such  Certificates.  A copy of the Pooling and  Servicing  Agreement
among the  Company,  the Trustee and any other  party  specified  in the related
Prospectus   Supplement  (the  "Agreement")  with  respect  to  each  Series  of
Certificates  will be  attached  to the  Form  8-K and  will  be  available  for
inspection at the corporate trust office of the Trustee specified in the related
Prospectus Supplement.  A schedule of the Contracts relating to such Series will
be attached to the  Agreement  delivered  to the  Trustee  upon  delivery of the
Certificates.                                                                   

      Whenever in this Prospectus  terms such as "Contract  Pool," "Trust Fund,"
"Agreement"  or  "Remittance  Rate" are used,  those terms  respectively  apply,
unless the context  otherwise  indicates,  to one specific  Contract Pool, Trust
Fund, each Agreement and the Remittance Rate applicable to the related Series of
Certificates.                                                                   

The Contract Pools                                                              

      Each pool of  Contracts  with  respect  to a Series of  Certificates  (the
"Contract  Pool") will consist  primarily of  manufactured  housing  installment
sales  contracts and  installment  loan  agreements and may include modular home
installment sales contracts and installment loan agreements  (collectively,  the
"Manufactured   Housing   Contracts")   originated  by  either   Vanderbilt,   a
manufactured  housing dealer or a lender in the ordinary  course of business and
purchased by Vanderbilt. The Contracts will be conventional manufactured housing
contracts or contracts  insured by the FHA or  partially  guaranteed  by the VA.
Each Manufactured Housing Contract will be secured by a new or used Manufactured
Home or Modular Home and, in certain  instances,  by a mortgage or deed of trust
on real  estate to which  the  Manufactured  Home is  permanently  affixed  (the
"Land-and-Home Contracts").  Each Contract secured by a Modular Home and some of
the  Contracts  secured  by a  Manufactured  Home may be  further  secured  by a
mortgage or deed of trust on real estate.  Except as otherwise  specified in the
related Prospectus  Supplement,  the Contracts will be fully amortizing and will
bear  interest  at a fixed or variable  annual  percentage  rate (the  "Contract
Rate") or at a Contract  Rate which  steps up on a  particular  date (a "step-up
rate").                                                                         

      If so  specified in the  Prospectus  Supplement,  the  Contract  Pool will
include notes or other evidences of indebtedness  (the "Mortgage Loans") secured
by a mortgage or deed of trust on one-to-four family residential properties (the
"Mortgaged  Properties").  The  Mortgage  Loans were  originated  or acquired by
Vanderbilt in the ordinary course of business.                                  

      Vanderbilt  or, if  specified  in the  related  Prospectus  Supplement,  a
limited  purpose finance  subsidiary of Vanderbilt  organized and established by
Vanderbilt (the "Company"),  as seller of the Contracts, will represent that the
Manufactured  Homes securing the Contracts consist of manufactured  homes within
the  meaning  of 42  United  States  Code,  Section  5402(6),  which  defines  a
"manufactured  home" as "a  structure,  transportable  in one or more           

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sections,  which,  in the traveling mode, is eight body feet or more in width or
forty body feet or more in length,  or, when erected on site,  is three  hundred
twenty or more  square  feet,  and  which is built on a  permanent  chassis  and
designed to be used as a dwelling  with or without a permanent  foundation  when
connected  to the  required  utilities,  and  includes  the  plumbing,  heating,
air-conditioning,  and electrical  systems contained  therein;  except that such
term shall  include any  structure  which meets all the  requirements  of [this]
paragraph   except  the  size   requirements  and  with  respect  to  which  the
manufacturer  voluntarily  files a  certification  required by the Secretary [of
Housing and Urban Development] and complies with the standards established under
[this] chapter."                                                                

      For each Series of  Certificates,  the Company  will assign the  Contracts
constituting  the Contract Pool to the trustee  named in the related  Prospectus
Supplement (the "Trustee").  Vanderbilt,  as Servicer (in such capacity referred
to herein  as the  "Servicer"),  will  service  the  Contracts  pursuant  to the
Agreement.  See "Description of the Certificates -- Servicing." Unless otherwise
specified in the related Prospectus Supplement,  the contract documents relating
to Manufactured Housing Contracts will be held for the benefit of the Trustee by
the  Servicer  and the  principal  documents  relating  to  Mortgage  Loans  and
Land-and-Home  Contracts will be delivered to the Trustee or a custodian for the
benefit of the Trustee.                                                         

      Each Contract Pool will be composed of Contracts  bearing  interest at the
annual fixed and/or  variable  Contract Rates and/or step-up rates  specified in
the Prospectus  Supplement.  The Monthly Payments for Contracts bearing interest
at a step-up rate  (sometimes  referred to herein as "step-up  rate  Contracts")
will  increase  on the dates on which the  Contract  Rates are  stepped up. Each
registered  holder  of a  Certificate  will  be  entitled  to  receive  periodic
distributions, which will typically be monthly, of all or a portion of principal
on the  underlying  Contracts  or  interest  on the  principal  balance  of such
Certificate at the Remittance Rate, or both.                                    

      The related  Prospectus  Supplement  will disclose in summary form for the
Contracts  contained in the related Contract Pool, among other things,  the year
of origination;  the range and the weighted average of Contract Rates; the range
of Loan-to-Value Ratios; the range and average of outstanding principal balances
as of the Cut-off Date;  the weighted  average term to scheduled  maturity as of
origination  and  as of  the  Cut-off  Date;  the  geographic  location  of  the
Manufactured  Homes  securing  the  Contracts;  the  percentage  and  amount  of
Contracts  secured by new or used  Manufactured  Homes; the aggregate  principal
balance of the Contracts;  and the last maturity date of any Contract. The Trust
Fund  may  include  monies  on  deposit  in a trust  account  (the  "Pre-Funding
Account") to be  established  with the Trustee,  which would be used to purchase
additional  Contracts  ("Subsequent  Contracts")  from the  Company  during  the
funding  period  specified  in the related  Prospectus  Supplement.  The related
Prospectus  Supplement  will specify the conditions that must be satisfied prior
to any transfer of Subsequent Contracts, including the requisite characteristics
of the Subsequent Contracts.                                                    

      The Company will make  representations  and warranties as to the types and
geographical distribution of the Contracts included in a Contract Pool and as to
the accuracy in all material  respects of certain  information  furnished to the
Trustee in respect of each such Contract. Upon a breach of any representation or
warranty  that   materially   and   adversely   affects  the  interests  of  the
Certificateholders  in a Contract,  the Company will be obligated either to cure
the breach in all material  respects,  to purchase the Contract or to substitute
another Contract as described below. This repurchase or substitution  obligation
constitutes the sole remedy available to the  Certificateholders  or the Trustee
for a breach of a representation or warranty by the Company. See "Description of
the Certificates -- Conveyance of Contracts."                                   

 USE OF PROCEEDS

      Substantially all of the net proceeds to be received from the sale of each
Series  of  Certificates  will be  used by the  Company  for  general  corporate
purposes,  including  the  purchase  of the  Contracts,  cost  of  carrying  the
Contracts  until  sale of the  related  Certificates  and to pay other  expenses
connected with pooling the Contracts and issuing the Certificates.              

 VANDERBILT MORTGAGE AND FINANCE, INC.

      Vanderbilt was incorporated in 1977 in the State of Tennessee.  As of June
30,  1999,  Vanderbilt  had  total  assets of  approximately  $805  million  and
stockholder's  equity of  approximately  $317 million.  Vanderbilt,  an indirect
subsidiary of Clayton Homes, Inc. ("CHI"),  is engaged in the business of, among
other things, purchasing,  originating,  selling and servicing installment sales
contracts and installment loan agreements for  manufactured                     

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housing and modular housing. CHI, through its affiliates, manufactures and sells
manufactured homes and modular homes, and owns, manages and markets manufactured
housing  communities.  Vanderbilt's  principal  office is  located  at 500 Alcoa
Trail, Maryville, Tennessee 37804, telephone number (423) 380-3515. An affiliate
of CHI acts as an insurance  broker for certain  types of  insurance,  including
hazard and credit life  insurance  policies,  some of which may cover certain of
the Contracts. Other affiliates of CHI reinsure hazard and credit life insurance
policies,  including  policies  that may cover  certain  of the  Contracts.  Two
separate indirect  subsidiaries of CHI,  Vanderbilt Life and Casualty  Insurance
Co., Ltd. and  Vanderbilt  Property and Casualty  Insurance Co., Ltd. may act as
reinsurer of insurance coverage relating to the Contracts.                      

      Vanderbilt  purchases and originates  manufactured housing contracts on an
individual  basis from its  principal  office.  Vanderbilt  arranges to purchase
manufactured  housing  installment  sales  contracts  originated by manufactured
housing  dealers  located in  approximately  29 states,  primarily  southern and
midwestern.  Most of these purchases are from dealers  indirectly  owned by CHI.
Dealers which are not owned by CHI must make an  application  to Vanderbilt  for
dealer approval. Upon satisfactory results of Vanderbilt's  investigation of the
dealer's  creditworthiness and general business  reputation,  Vanderbilt and the
dealer enter into a dealer agreement.                                           

      In addition to purchasing  manufactured  housing contracts from dealers on
an individual  basis,  Vanderbilt  makes bulk purchases of manufactured  housing
contracts  and  services  on behalf  of other  owners  of  manufactured  housing
contracts that were not originally purchased or originated by Vanderbilt.  These
purchases may be from, and these servicing arrangements may be made with respect
to, the  portfolios of other  lenders or finance  companies,  the  portfolios of
governmental  agencies or  instrumentalities or the portfolios of other entities
that purchase and hold manufactured housing contracts.                          

      Vanderbilt  is actively  seeking  arrangements  by which it would  service
and/or  acquire  manufactured  housing  contracts  originated by other  lenders.
Vanderbilt's  management  currently  anticipates  it will  only  seek  servicing
responsibilities which relate to manufactured housing contracts.                

 UNDERWRITING POLICIES

General                                                                         

      Customers  desiring to obtain financing from Vanderbilt  complete a credit
application  form.  In the  case of those  dealers  owned  by CHI,  the  manager
initially  evaluates the  application  and then  forwards it to  Vanderbilt  for
consideration. In the case of dealers that are not owned by CHI, the application
is transmitted to Vanderbilt for consideration.                                 

      Credit  applications  are then evaluated by Vanderbilt's  credit officers.
With  respect  to those  customers  determined  to be  creditworthy,  Vanderbilt
requires a down payment in the form of cash,  the trade-in value of a previously
owned  manufactured  home, and/or the estimated value of equity in real property
pledged as  additional  collateral.  For  previously  owned homes,  the trade-in
allowance  accepted by the dealer must be consistent with the value of such home
determined  by Vanderbilt in light of current  market  conditions.  The value of
real property pledged as additional  collateral is estimated by personnel of the
dealer,  who are not  appraisers  but are  familiar  with the area in which  the
property is located.  The minimum  amount of the down payment is typically 5% of
the purchase  price.  The purchase  price includes the stated cash sale price of
the  manufactured  home, sales or other taxes and certain fees and set-up costs.
The balance of the purchase price and certain insurance  premiums  (including up
to five years of premiums  on  required  hazard  insurance)  are  financed by an
installment  sales contract  providing for a purchase money security interest in
the  manufactured  home and a  mortgage  on real  property,  if any,  pledged as
additional collateral.  Normally, the contracts originated by Vanderbilt provide
for equal monthly  payments,  generally over a period of five to thirty years at
fixed rates of interest.                                                        

      Vanderbilt's   underwriting   guidelines   generally   require  that  each
applicant's credit history, residence history,  employment history and income to
debt  payment  ratios be  examined.  There are no  requirements  on the basis of
which, if met, credit is routinely  approved;  or if they are not met, credit is
routinely denied. If in the judgment of Vanderbilt's credit manager an applicant
does  not  meet  minimum   underwriting   criteria,   there  generally  must  be
compensating  higher  ratings  with  respect to other  criteria  in order for an
applicant  to  be  approved.  Credit  managers  must  confirm  that  the  credit
investigation  gave a complete  and  up-to-date  accounting  of the  applicant's
creditworthiness.  Credit  managers are encouraged to obtain second  opinions on
loans for relatively  larger dollar amounts or those which,  in their  judgment,
tend to rank lower in terms of underwriting criteria.  Generally, the sum of the
monthly obligation for installment obligations,  including the manufactured home
loan  payment and monthly                                                       

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site costs, should not exceed 50% of the applicant's gross monthly income. Since
January 1989  Vanderbilt  has, in addition to the above  considerations,  used a
credit  scoring  system to evaluate  credit  applicants.  The credit score of an
applicant is used as a further guide in determining  whether to extend credit to
the applicant.  All of the Mortgage  Loans  originated or acquired by Vanderbilt
are  underwritten  or   reunderwritten  by  Vanderbilt  in  a  manner  generally
consistent with the foregoing guidelines.                                       

      In the case of a Contract Pool  containing  Contracts  originated by other
originators  and  acquired by  Vanderbilt  ("Acquired  Contracts"),  the related
Prospectus Supplement will describe such Contracts.                             

Various Financing Terms                                                         

      In addition to level  payment,  fixed rate  contracts,  Vanderbilt  offers
various other financing arrangements. Vanderbilt has developed financing options
such as contracts  with a 7 year term (compared to the industry norm of 15 to 30
years),  which provides  financing to its customers at a relatively low cost. In
January 1990,  Vanderbilt introduced a bi-weekly payment contract which provides
for  26  payments  a  year,  which  are  made  by  electronically  debiting  the
purchaser's  checking account.  In 1989,  Vanderbilt began originating  variable
rate Contracts which provide for periodic Contract Rate adjustments, In general,
the  Contract  Rate  equals  the  sum  of a  fixed  margin  and an  index  rate.
Vanderbilt's   originations  of  variable  rate  Contracts  has  increased  from
relatively few prior to 1994 to a high of 11,594  originations with an aggregate
dollar amount of approximately $430,240,983 in fiscal 1999.                     

      In 1996,  Vanderbilt  introduced  contracts  with  financing  terms  which
provide for an annual increase in monthly  payments over the first five years of
the term of the Contracts (the "Escalating  Principal  Payment  Contracts").  An
Escalating  Principal  Payment  Contract  provides  initially  for lower monthly
payments than if the contract were of a shorter term.  Each year for a period of
five years, the term of the Escalating Principal Payment Contract  automatically
converts to a shorter term, and the monthly payment  increases  accordingly.  At
year six, the monthly  payment  increases to a level monthly payment which fully
amortizes the remaining  principal  over a specified  term which is shorter than
the original term of the Escalating  Principal  Payment  Contract.  There are no
periods  in which the  Escalating  Principal  Payment  Contracts  have  negative
amortization.                                                                   

      In 1998,  Vanderbilt introduced contracts which provide for Contract Rates
that  periodically  increase  over a certain  period of time (the  "Step-up Rate
Contracts").  Step-up  Rate  Contracts  provide for  periodic  increases  in the
applicable  interest rate at the end of certain intervals during the term of the
Contracts,  including at the end of each twelve month interval  during the first
three  years  following  origination  and at the end of each six month  interval
during the first eighteen  months  following  origination.  After the applicable
interest rate increase  period,  the Contract Rates are fixed.  The total amount
and  principal  portion of each  monthly  payment  that is due on a Step-up Rate
Contract at the time of each  adjustment to its Contract Rate will be determined
on a basis that would cause the  Contract  (which bear  interest at an increased
rate after such  adjustment) to be fully  amortized over its remaining term on a
level payment  basis.  There are no periods in which the Step-up Rate  Contracts
have negative amortization.                                                     

      During the last six fiscal years, Vanderbilt has become the most important
source of financing for  purchasers of CHI's homes.  In fiscal 1988,  Vanderbilt
originated  5,692  contracts,  in  fiscal  1993,  Vanderbilt  originated  10,880
contracts,  in fiscal 1994,  Vanderbilt  originated 12,401 contracts,  in fiscal
1995,  Vanderbilt  originated  13,857  contracts,  in  fiscal  1996,  Vanderbilt
originated  16,910 contracts and in fiscal 1997,  Vanderbilt  originated  21,691
contracts. For fiscal year 1998, Vanderbilt originated 24,304 contracts. At June
30, 1999,  Vanderbilt  was  servicing  approximately  135,000  contracts  and an
aggregate  dollar  amount of  approximately  $3.5 billion,  of which  Vanderbilt
either  originated,  purchased  from  dealers or  acquired  from  other  lenders
approximately 120,000 contracts with an aggregate dollar amount of approximately
$3.2  billion.  Vanderbilt  expects it will  continue to originate a significant
portion  of the  financing  for  purchasers  of homes  sold by CHI owned  retail
centers, consistent with the overall level of CHI's retail sales.               

YIELD CONSIDERATIONS

      The  Remittance  Rates  and  the  weighted  average  Contract  Rate of the
Contracts  relating  to each  Series  of  Certificates  will be set forth in the
related Prospectus Supplement.                                                  

      Unless  otherwise  specified in the related  Prospectus  Supplement,  each
monthly  accrual of interest on a Contract is calculated at  one-twelfth  of the
product  of the  Contract  Rate and the  principal  balance  outstanding  on the
scheduled  payment  date  for  such  Contract  in the  preceding  month.  Unless
otherwise  specified in the related Prospectus  Supplement,  the Remittance Rate
with respect to each Certificate will be calculated similarly.                  

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      The Prospectus  Supplement for each Series will indicate that a lower rate
of principal  prepayments  than anticipated  would  negatively  affect the total
return to  investors  of any Class or such  sub-class  of  Certificates  that is
offered at a discount to its  principal  amount,  and a higher rate of principal
prepayments  than  anticipated  would  negatively  affect  the  total  return to
investors of any such Class or sub-class  of  Certificates  that is offered at a
premium to its principal amount or without any principal amount.                

      If  a  Series  of   Certificates   contains   Classes  or  sub-classes  of
Certificates entitled to receive distributions of principal or interest or both,
in a specified order other than as a specified  percentage of each  distribution
of  principal  or interest or both,  the  Prospectus  Supplement  will set forth
information,  measured  relative to a prepayment  standard or model specified in
such Prospectus Supplement,  with respect to the projected weighted average life
of each such  Class or  sub-class  and the  percentage  of the  original  Stated
Balance of each such Class or sub-class  that would be  outstanding on specified
Remittance  Dates  for such  Series  based  on the  assumptions  stated  in such
Prospectus  Supplement,  including assumptions that prepayments on the Contracts
in the  related  Trust  Fund  are  made at rates  corresponding  to the  various
percentage of such prepayment standard or model.                                

MATURITY AND PREPAYMENT CONSIDERATIONS

Maturity                                                                        

      Unless  otherwise  specified  in the related  Prospectus  Supplement,  the
Contracts will have maturities at origination of not more than 30 years.        

Prepayment Considerations                                                       

      Contracts  generally  may be prepaid in full or in part  without  penalty.
Based on  Vanderbilt's  experience  with the portfolio of  manufactured  housing
contracts  which  it  services,  Vanderbilt  anticipates  that a  number  of the
contracts  will be  prepaid  prior  to their  maturity.  A  number  of  factors,
including  homeowner  mobility,   general  and  regional  economic   conditions,
competition among  manufactured  housing lenders and prevailing  interest rates,
may  influence  prepayments.  The  refinancing  of any Contract will result in a
prepayment in full of such Contract.  Declining interest rates and certain other
factors may result in an increased number of refinancings which would affect the
average life of the  Certificates.  In addition,  the repurchase of Contracts on
account of certain breaches of  representations  and warranties in the Agreement
have the effect of prepaying  such  Contracts.  Most of the Contracts  contain a
"due-on-sale"  clause that would permit the Servicer to accelerate  the maturity
of a Contract  upon the sale of the related  Manufactured  Home.  In the case of
those  Contracts that do contain  due-on-sale  clauses,  the Servicer may permit
assumptions of such Contracts if the purchaser of the related  Manufactured Home
satisfies the Vanderbilt's then-current underwriting standards.                 

      Information  regarding the  prepayment  model or any other rate of assumed
prepayment,  as applicable,  will be set forth in the Prospectus Supplement with
respect to a Series of Certificates.                                            

      See  "Description of the Certificates -- Termination of the Agreement" for
a  description  of the  Company's or the  Servicer's  option to  repurchase  the
Contracts  comprising  part of a  Trust  Fund  when  the  aggregate  outstanding
principal  balance of such Contracts is less than a specified  percentage of the
initial  aggregate  outstanding  principal  balance of such  Contracts as of the
related  Cut-off  Date.  See also "The Trust Fund -- The  Contract  Pools" for a
description  of the  obligations of the Company to repurchase a Contract in case
of a breach of a representation or warranty relative to such Contract.          

 DESCRIPTION OF THE CERTIFICATES

      The  Certificates  of one or more series (each, a "Series") may be offered
and sold from time to time under this  Prospectus  and a Prospectus  Supplement.
Each Series of Certificates  will be issued  pursuant to a separate  pooling and
servicing agreement (each, an "Agreement") to be entered into among the Company,
as Seller,  Vanderbilt, as Servicer, the trustee named in the related Prospectus
Supplement (the  "Trustee") and such other parties,  if any, as are described in
the applicable Prospectus  Supplement.  The following summaries describe certain
provisions expected to be common to each Agreement and the related Certificates,
but do not purport to be complete and are subject to, and are qualified in their
entirety  by  reference  to, the  provisions  of the related  Agreement  and the
description set forth in the related Prospectus Supplement.  Section references,
if any,  contained herein refer to sections of the form of Agreement filed as an
exhibit to the  Registration  Statement of which this  Prospectus is a part     

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(the "Registration  Statement").  The portions of such sections described herein
may be contained in different numbered sections in the actual Agreement pursuant
to which any Series of  Certificates  is issued.  The  provisions of the form of
Agreement  filed  as an  exhibit  to the  Registration  Statement  that  are not
described  herein may differ from the  provisions of any actual  Agreement.  The
material  differences  will be described in the related  Prospectus  Supplement.
Capitalized  terms used herein and not otherwise  defined  herein shall have the
meanings  assigned to them in the form of  Agreement  filed as an exhibit to the
Registration Statement.                                                         

General                                                                         

      The Certificates may be issued in one or more Classes or sub-classes (each
referred to in this  Prospectus as a "Class").  If the  Certificates of a Series
are issued in more than one Class,  the  Certificates of all or less than all of
such Classes may be sold pursuant to this Prospectus,  and there may be separate
Prospectus  Supplements  relating  to one or more of such  Classes so sold.  Any
reference herein to the Prospectus  Supplement relating to a Series comprised of
more  than  one  Class  should  be  understood  as a  reference  to  each of the
Prospectus  Supplements  relating to the Classes sold  hereunder.  Any reference
herein  to the  Certificates  of a Class  should be  understood  to refer to the
Certificates of a Class within a Series,  the Certificates of a sub-class within
a Series or all of the Certificates of a single-Class Series, as the context may
require.                                                                        

      The  Certificates  of each Series will be issued in fully  registered form
only and  will  represent  the  interest  specified  in the  related  Prospectus
Supplement in a separate trust fund (the "Trust Fund")  created  pursuant to the
related Agreement. The Trust Fund will be held by the Trustee for the benefit of
the  Certificateholders.  Each Trust Fund will  generally  include (i) Contracts
(the "Contract Pool") which are subject to the Agreement from time to time, (ii)
amounts held in the  Certificate  Account  from time to time and (iii)  proceeds
from certain hazard insurance on individual Manufactured Homes, Modular Homes or
Mortgaged  Properties (or the related real estate,  in the case of Land-and-Home
Contracts) acquired by repossession, and may include a letter of credit, limited
guarantee of CHI, surety bond, pool insurance  policy,  cash reserve fund or any
other  form  of  credit  enhancement,  or any  combination  thereof.  Except  as
otherwise specified in the related Prospectus Supplement,  the Certificates will
be freely  transferable  and  exchangeable  at the corporate trust office of the
Trustee  at the  address  set forth in the  related  Prospectus  Supplement.  No
service  charge  will be made for any  registration  of  exchange or transfer of
Certificates,  but the Trustee may require  payment of a sum sufficient to cover
any tax or other governmental charge.                                           

      Ownership of each Contract Pool may be evidenced by one or more classes of
Certificates,  each  representing the interest in the Contract Pool specified in
the  related  Prospectus  Supplement.   One  or  more  Classes  of  Certificates
evidencing interests in Contracts may be Subordinated  Certificates,  evidencing
the right of the holders thereof to receive any or a portion of distributions of
principal or interest or both on the Contracts  subordinate to the rights of the
holders of other Classes of Certificates ("Senior  Certificates") as provided in
the related  Prospectus  Supplement.  If a Series of Certificates  contains more
than one Class of Subordinated  Certificates,  distributions  and losses will be
allocated  among  such  Classes  in  the  manner  described  in  the  Prospectus
Supplement.                                                                     

      A Series of Certificates may consist of Classes of Certificates evidencing
the right to receive distributions of principal or interest or both in the order
specified in the related  Prospectus  Supplement.  A Class of  Certificates of a
Series may be  divided  into two or more  sub-classes.  The  related  Prospectus
Supplement  will  specify  whether a Class has been so divided  and the terms of
each sub-class. The holders of each sub-class of a Class of Certificates will be
entitled to the percentages  (which may be 0%) of principal or interest payments
or  both  on the  related  Contracts  as  specified  in the  related  Prospectus
Supplement.   The  related  Prospectus   Supplement  will  specify  the  minimum
denomination  or initial  principal  amount of  Contracts  evidenced by a single
Certificate of each Class of Certificates of a Series (a "Single Certificate"). 

      Distributions of principal and interest on the  Certificates  will be made
on the payment dates set forth in the related  Prospectus  Supplement  (each,  a
"Remittance Date") to the persons in whose names the Certificates are registered
at the close of  business on the related  record date  specified  in the related
Prospectus  Supplement (the "Record Date").  Distributions will be made by check
mailed to the  address  of the  person  entitled  thereto  as it  appears on the
Certificate Register,  or, to the extent described in the related Agreement,  by
wire transfer,  except that the final distribution in retirement of Certificates
will be made only upon  presentation  and surrender of the  Certificates  at the
office or agency of the Trustee  specified in the final  distribution  notice to
Certificateholders.                                                             

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Global Certificates                                                             

      The  Certificates of a Class may be issued in whole or in part in the form
of one or more global certificates  (each, a "Global  Certificate") that will be
deposited  with, or on behalf of, and registered in the name of a nominee for, a
depositary (the "Depositary")  identified in the related Prospectus  Supplement.
The description of the  Certificates  contained in this Prospectus  assumes that
the  Certificates  will be issued in definitive  form. If the  Certificates of a
Class  are  issued  in the  form of one or more  Global  Certificates,  the term
"Certificateholder"  should be understood to refer to the  beneficial  owners of
the  Global  Certificates,  and the  rights of such  Certificateholders  will be
limited as described under this subheading.                                     

      Global Certificates will be issued in registered form. Unless and until it
is exchanged in whole or in part for  Certificates in definitive  form, a Global
Certificate may not be transferred  except as a whole by the Depositary for such
Global  Certificate  to a nominee  of such  Depositary  or by a nominee  of such
Depositary to such  Depositary or another  nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary or a nominee of
such successor.                                                                 

      The  specific  terms of the  depositary  arrangement  with  respect to any
Certificates of a Class will be described in the related Prospectus  Supplement.
It is  anticipated  that the following  provisions  will apply to all depositary
arrangements:                                                                   

      Upon the issuance of a Global Certificate,  the Depositary for such Global
Certificate will credit, on its book-entry registration and transfer system, the
respective   denominations  of  the  Certificates  represented  by  such  Global
Certificate  to the  accounts  of  institutions  that  have  accounts  with such
Depositary  ("participants").  Ownership  of  beneficial  interests  in a Global
Certificate  will be limited to  participants or persons that may hold interests
through   participants.   Ownership  of  beneficial  interests  in  such  Global
Certificate  will be  shown  on,  and the  transfer  of that  ownership  will be
effected only through,  records  maintained  by the  Depositary  for such Global
Certificate or by  participants or persons that hold through  participants.  The
laws of some states require that certain  purchasers of securities take physical
delivery of such  securities in definitive  form.  Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Certificate.    

      So long as the Depositary for a Global Certificate, or its nominee, is the
owner of such Global  Certificate,  such Depositary or such nominee, as the case
may be,  will be  considered  the  sole  owner  or  holder  of the  Certificates
represented  by such Global  Certificate  for all purposes  under the  Agreement
relating to such Certificates.  Except as set forth below,  owners of beneficial
interests in a Global  Certificate will not be entitled to have  Certificates of
the Series  represented  by such Global  Certificate  registered in their names,
will not receive or be entitled to receive physical  delivery of Certificates of
such Series in definitive  form and will not be considered the owners or holders
thereof under the Agreement governing such Certificates.                        

      Distributions  or payments on  Certificates  registered  in the name of or
held by a  Depositary  or its  nominee  will be  made to the  Depositary  or its
nominee,  as the case may be,  as the  registered  owner  for the  holder of the
Global  Certificate  representing such  Certificates.  In addition,  all reports
required under the  applicable  Agreement to be made to  Certificateholders  (as
described below under "Reports to Certificateholders")  will be delivered to the
Depositary  or its  nominee,  as the  case  may  be.  None of the  Company,  the
Servicer, the Trustee or any agent thereof (including any applicable Certificate
Registrar or Paying  Agent) will have any  responsibility  or liability  for any
aspect of the  records  relating to or  payments  made on account of  beneficial
ownership  interest in a Global  Certificate or for maintaining,  supervising or
reviewing any records  relating to such  beneficial  ownership  interests or for
providing reports to the related beneficial owners.                             

      The Company expects that the Depositary for Certificates of a Class,  upon
receipt of any distribution or payment in respect of a Global Certificate,  will
credit immediately participants' accounts with payments in amounts proportionate
to their respective  beneficial  interest in such Global Certificate as shown on
the  records of such  Depositary.  The Company  also  expects  that  payments by
participants to owners of beneficial  interests in such Global  Certificate held
through  such  participants  will  be  governed  by  standing  instructions  and
customary practices, as is now the case with securities held for the accounts of
customers  registered in "street name," and will be the  responsibility  of such
participants.                                                                   

      If a Depositary  for  Certificates  of a Class is at any time unwilling or
unable to continue as Depositary and a successor  depositary is not appointed by
or on behalf of the Company  within the time period  specified in the           

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Agreement,  the Company  will cause to be issued  Certificates  of such Class in
definitive form in exchange for the related Global  Certificate or Certificates.
In addition,  the Company may at any time and in its sole  discretion  determine
not to have  any  Certificates  of a  Class  represented  by one or more  Global
Certificates  and, in such event,  will cause to be issued  Certificates of such
Class in  definitive  form in exchange  for the related  Global  Certificate  or
Certificates.  Further,  if  the  Company  so  specifies  with  respect  to  the
Certificates  of  a  Class,  an  owner  of a  beneficial  interest  in a  Global
Certificate representing  Certificates of such Class may, on terms acceptable to
the Company and the Depositary for such Global Certificate, receive Certificates
of such Class in definitive form. In any such instance, an owner of a beneficial
interest  in a Global  Certificate  will be  entitled  to  physical  delivery in
definitive  form  of  Certificates  of the  Class  represented  by  such  Global
Certificate equal in denominations to such beneficial  interest and to have such
Certificates registered in its name.                                            

Conveyance of Contracts                                                         

      The Company will transfer,  assign,  set over and otherwise  convey to the
Trustee all right, title and interest of the Company in the Contracts, including
all security  interests  created  thereby and any related  mortgages or deeds of
trust,  all principal and interest  received on or with respect to the Contracts
(other than receipts of principal  and interest due on the Contracts  before the
Cut-off Date), all rights under certain hazard insurance policies on the related
Manufactured Homes, Modular Homes or Mortgaged Properties, if any, all documents
contained in the Contract files,  Land-and-Home  Contract files or Mortgage Loan
files,  as applicable,  and all proceeds  derived from any of the foregoing.  On
behalf of the Trust Fund, as the issuer of the related  Series of  Certificates,
the Trustee,  concurrently  with such  conveyance,  will execute and deliver the
Certificates to the order of the Company.  The Contracts will be as described on
a list attached to the  Agreement.  Such list will include the current amount of
monthly  payments  due on  each  Contract  as of the  date  of  issuance  of the
Certificates and the Contract Rate on each Contract. Such list will be available
for inspection by any Certificateholder at the principal executive office of the
Servicer. Prior to the conveyance of the Contracts to the Trustee, the Company's
operations  department  will  complete  a review of all of the  Contract  files,
Land-and-Home  Contract files and Mortgage Loan files, as applicable,  including
the certificates of title to, or other evidence of a perfected security interest
in, the  Manufactured  Homes,  confirming  the accuracy of the list of Contracts
delivered to the Trustee. Any Contract discovered not to agree with such list in
a manner that is materially  adverse to the interests of the  Certificateholders
will be repurchased by the Company or replaced with another Contract, or, if the
discrepancy  relates to the unpaid principal balance of a Contract,  the Company
may deposit cash in the separate account  maintained at an Eligible  Institution
in the name of the Trustee (the  "Certificate  Account") in an amount sufficient
to offset such discrepancy.                                                     

      The  Agreement  will  designate  the  Servicer  as  custodian  to maintain
possession,  as the Trustee's  agent,  of the Contracts and any other  documents
related to the  Manufactured  Homes or Modular  Homes (other than the  principal
documents relating to Land-and-Home Contracts and Mortgage Loans). To facilitate
servicing and save  administrative  costs,  the documents will not be physically
segregated from other similar documents that are in the Company's possession. In
order to give notice of the right, title and interest of the  Certificateholders
to the  Contracts,  the Company  will cause a UCC-1  financing  statement  to be
executed and filed by the Company  identifying the Company as the seller and the
Trustee as the buyer of the Contracts,  and the Company's accounting records and
computer systems will also reflect such sale and assignment. In addition, within
one week after the initial delivery of the  Certificates,  the Contracts will be
stamped to reflect their assignment to the Trustee.  However,  if through fraud,
negligence  or  otherwise,  a subsequent  purchaser  were able to take  physical
possession of the Contracts without  knowledge of the assignment,  the Trustee's
interest in the Contracts could be defeated. See "Risk Factors -- Risks relating
to  enforceability  of  the  contracts."  Unless  otherwise   specified  in  the
Prospectus  Supplement,  the  Agreement  will  designate  the Trustee or another
independent  custodian,  as the Trustee's  agent, to maintain  possession of the
principal documents relating to all Land-and-Home Contracts and Mortgage Loans. 

      In general,  and except as otherwise  specified in the related  Prospectus
Supplement,  the Company will make certain representations and warranties in the
Agreement with respect to each Contract as of the Closing Date, including that: 

           (a) as of the Cut-off Date, or the date of origination, if later, the
      most recent scheduled  payment was made or was not delinquent more than 59
      days (or such other  number of days  specified  in the related  Prospectus
Supplement);                                                        

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           (b) no provision  of a Contract has been waived,  altered or modified
      in any  respect,  except by  instruments  or  documents  contained  in the
      Contract file, the Land-and-Home  Contract file or the Mortgage Loan file,
as applicable;                                                      

           (c) each  Contract is a legal,  valid and binding  obligation  of the
      Obligor and is enforceable in accordance  with its terms (except as may be
limited by laws affecting creditors' rights generally);             

           (d) no  Contract  is  subject  to any right of  rescission,  set-off,
counterclaim or defense;                                            

           (e) each Contract is covered by hazard insurance  described under "--
Servicing -- Hazard Insurance";                                     

           (f) each  Contract  has been  originated  by a  manufactured  housing
      dealer or lender or Vanderbilt in the ordinary  course of such dealer's or
      lender's or  Vanderbilt's  business and, if  originated by a  manufactured
      housing  dealer or other lender,  was  purchased by the  Vanderbilt in the
ordinary course of business;                                        

           (g) no Contract  was  originated  in or is subject to the laws of any
      jurisdiction  whose laws would make the  transfer  of the  Contract  or an
      interest  therein to the  Trustee or a separate  trustee  pursuant  to the
Agreement or pursuant to the Certificates unlawful;                 

(h) each Contract complies with all requirements of law;  

           (i) no Contract has been satisfied,  subordinated in whole or in part
      or rescinded and the Manufactured  Home securing the Contract has not been
released from the lien of the Contract in whole or in part;         

           (j)  each   Manufactured   Housing   Contract  creates  a  valid  and
      enforceable  first priority  security  interest in favor of the Company in
      the   Manufactured   Home  covered  thereby  and,  with  respect  to  each
      Land-and-Home  Contract and each Mortgage Loan,  the lien created  thereby
      has been recorded or will be recorded within six months, and such security
interest or lien has been assigned by the Company to the Trustee;   

   (k) all parties to each Contract had capacity to execute such
Contract;                                                           

           (l) no  Contract  has been  sold,  assigned  or  pledged to any other
      person and prior to the  transfer of the  Contracts  by the Company to the
      Trustee,  the Company had good and marketable  title to each Contract free
      and clear of any  encumbrance,  equity,  loan,  pledge,  charge,  claim or
      security  interest,  and was the sole owner and had full right to transfer
such Contract to the Trustee;                                       

           (m) as of the Closing Date there was no default, breach, violation or
      event  permitting  acceleration  under any  Contract  (except  for payment
      delinquencies  permitted by clause (a) above),  no event which with notice
      and the expiration of any grace or cure period would constitute a default,
      breach,  violation or event permitting  acceleration  under such Contract,
and the Company has not waived any of the foregoing;                

           (n) as of the Closing Date there were,  to the best of the  Company's
      knowledge,  no liens or claims  which have been  filed for work,  labor or
      materials  affecting a Manufactured Home or any related Mortgaged Property
      securing a Contract,  which are or may be liens prior or equal to the lien
of the Contract;                                                    

           (o)  each  Contract  other  than  a  step-up  rate  Contract  and  an
Escalating Payment Contract is:                                     

           (i) a  fully-amortizing  loan with a fixed Contract Rate and provides
for level payments over the term of such Contract or                

(ii) a loan with a variable interest rate;                

           (p) each Contract contains customary and enforceable  provisions such
      as to render the rights and  remedies of the holder  thereof  adequate for
realization against the collateral of the benefits of the security; 

           (q) the  description of each Contract set forth in the list delivered
to the Trustee is true and correct;                                 

(r)  there is only one original of each Contract;         

           (s) none of the Contracts had a  Loan-to-Value  Ratio at  origination
      greater  than  100% (or such  other  percentage  amount  specified  in the
related Prospectus Supplement);                                     

           (t) at the time of origination of each Contract or for the percentage
      of Contracts set forth in the Prospectus  Supplement,  the Obligor was the
primary resident of the related Manufactured Home;                  

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           (u) other than the Land-and-Home  Contracts or the Mortgage Loans, if
      any, the related Manufactured Home is not considered or classified as part
      of  the  real  estate  on  which  it is  located  under  the  laws  of the
      jurisdiction in which it is located as would render  unperfected or impair
      the priority of the security interest in such Manufactured Home, and as of
      the Closing Date such  Manufactured Home was, to the best of the Company's
knowledge, free of damage and in good repair;                       

           (v) the related Manufactured Home is a "manufactured home" within the
meaning of 42 United States Code, Section 5402(6); and              

           (w) each Contract is a "qualified  mortgage" under Section 860G(a)(3)
      of the Code and each  Manufactured  Home is "manufactured  housing" within
the meaning of Section 25(e)(10) of the Code.                       

      Under the terms of the Agreement,  and subject to the conditions specified
in the preceding  paragraph and to the Company's option to effect a substitution
as described in the next paragraph,  the Company will be obligated to repurchase
for the  Repurchase  Price (as defined below) any Contract on the first business
day after  the first  Determination  Date  which is more than 90 days  after the
Company becomes aware, or should have become aware, or the Company's  receipt of
written  notice  from  the  Trustee  or  the  Servicer,   of  a  breach  of  any
representation  or  warranty  of the Company in the  Agreement  that  materially
adversely  affects the Trust Fund's  interest in any Contract if such breach has
not been cured.  The  "Repurchase  Price" for any Contract will be the remaining
principal  amount  outstanding  on such Contract on the date of repurchase  plus
accrued and unpaid  interest  thereon at its  Contract  Rate to the date of such
repurchase.  This repurchase obligation constitutes the sole remedy available to
the Trust Fund and the  Certificateholders  for a breach of a representation  or
warranty under the Agreement with respect to the Contracts (but not with respect
to any other breach by the Company of its obligations under the Agreement). If a
prohibited transaction tax under the REMIC provisions of the Code is incurred in
connection with such  repurchase,  distributions  otherwise  payable to Residual
Certificateholders will be applied to pay such tax. The Company will be required
to pay the amount of such tax that is not funded out of such distributions.     

      In lieu of purchasing a Contract as specified in the preceding  paragraph,
during the two-year  period  following the Closing Date, the Company may, at its
option,  substitute an Eligible  Substitute  Contract (as defined below) for the
Contract that it is otherwise obligated to repurchase (referred to herein as the
"Replaced  Contract").  An "Eligible  Substitute  Contract"  is a Contract  that
satisfies,  as  of  the  date  of  its  substitution,  the  representations  and
warranties specified in the Agreement, has a Scheduled Principal Balance that is
not greater than the Scheduled Principal Balance of the Replaced Contract, has a
Contract  Rate  that is at least  equal  to the  Contract  Rate of the  Replaced
Contract and has a remaining term to scheduled maturity that is not greater than
the remaining term to scheduled maturity of the Replaced Contract.  In the event
that more than one Contract is substituted,  the above requirements with respect
to Scheduled  Principal  Balance,  Contract Rate and remaining term to scheduled
maturity  may be  satisfied  on an  aggregate  or  weighted  average  basis,  as
applicable.  The Company will be required to deposit in the Certificate  Account
cash in the amount,  if any,  by which the  Scheduled  Principal  Balance of the
Replaced Contract exceeds the Scheduled  Principal Balance of the Contract being
substituted. Such deposit will be deemed to be a partial principal prepayment.  

Payments on Contracts                                                           

      Unless  otherwise  specified in the related  Prospectus  Supplement,  each
Certificate  Account will be a trust account  established  by the Servicer as to
each Series of Certificates  or a Group of  Certificates  within a Series in the
name of the Trustee (i) with a depository  institution,  the long-term unsecured
debt  obligations  of which at the time of any deposit  therein are rated within
the two highest  rating  categories  or such other  rating  category as will not
adversely  affect the rating assigned to the  Certificates by each rating agency
rating the  Certificates  of such Series,  (ii) with the trust  department  of a
depositary  institution,  (iii) in an account or accounts  the deposits in which
are fully insured by the Federal Deposit Insurance Corporation ("FDIC"), (iv) in
an account or  accounts  the  deposits  in which are insured by the FDIC (to the
limits  established by the FDIC), the uninsured  deposits in which are otherwise
secured such that, as evidenced by an opinion of counsel, the Certificateholders
have a claim with respect to the funds in the Certificate Account or a perfected
first priority security interest against any collateral securing such funds that
is superior to the claims of any other  depositors  or general  creditors of the
depository  institution with which the Certificate  Account is maintained or (v)
otherwise acceptable to the rating agency without reduction or withdrawal of the
rating assigned to the relevant Certificates.  The collateral eligible to secure
amounts  in the                                                                 

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Certificate Account is limited to United States government  securities and other
high-quality investments ("Eligible Investments").  A Certificate Account may be
maintained  as an interest  bearing  account,  or the funds held  therein may be
invested pending each succeeding Remittance Date in Eligible Investments.       

      Unless  otherwise  specified  in the related  Prospectus  Supplement,  the
Servicer  will deposit in the  Certificate  Account the  following  payments and
collections received or made by it subsequent to the Cut-off Date:              

                (i) all  Obligor  payments  on account of  principal,  including
principal prepayments, on the Contracts;                  

                (ii)  all  Obligor  payments  on  account  of  interest  on  the
Contracts;                                                

                (iii) all amounts  received and retained in connection  with the
           liquidation of defaulted Contracts, net of liquidation expenses ("Net
Liquidation Proceeds");                                   

                (iv) all proceeds  received under any hazard or other  insurance
           policy  covering any  Contract,  other than proceeds to be applied to
           the  restoration  or repair of the  Manufactured  Home or released to
Obligor;                                                  

                (v) any Advances made as described under  "Advances" and certain
           other  amounts  required  under the  Agreement to be deposited in the
Certificate Account;                                      

                (vi) all amounts received from any credit  enhancement  provided
with respect to a Series of Certificates;                 

                (vii) all  proceeds  of any  Contract  or  property  acquired in
           respect  thereof  repurchased  by the  Servicer,  or the Company,  or
    otherwise as described above or under "Termination" below; and

                (viii) all amounts,  if any,  required to be  transferred to the
        Certificate Account from a Reserve Fund pursuant to the Agreement.

Distributions on Certificates                                                   

      Except as otherwise provided in the related Prospectus Supplement, on each
Remittance  Date,  the Trustee will  withdraw  from the  applicable  Certificate
Account and  distribute  to the  Certificateholders  of each Class (other than a
Series having a Class of Subordinated Certificates,  as described below), either
the specified interest of such Class in the Contract Pool times the aggregate of
all amounts on deposit in the  Certificate  Account as of the fifth Business Day
preceding  the  Remittance  Date or such other date as may be  specified  in the
related Prospectus  Supplement (the "Determination  Date"), or, in the case of a
Series of  Certificates  comprised of Classes  which have been assigned a Stated
Balance,  payments of interest and  payments in reduction of the Stated  Balance
from all amounts on deposit in the Certificate  Account as of the end of the Due
Period immediately prior to such Remittance Date, in the priority and calculated
in the manner set forth in the related  Prospectus  Supplement,  except, in each
case:  (i) all payments or  collections  due after the Due Period  preceding the
month in which the  Remittance  Date  occurs;  (ii) all  scheduled  payments  of
principal  and  interest  due on a date or dates  subsequent  to the Due  Period
preceding the Determination Date; (iii) amounts  representing  reimbursement for
Advances,  such  reimbursement  being  limited,  as  described  in  the  related
Prospectus  Supplement,  to amounts  received on  particular  Contracts  as late
collections  of  principal  or  interest  as to which the  Servicer  has made an
unreimbursed Advance; and (iv) amounts representing reimbursement for any unpaid
Servicing Fee and expenses from Liquidation Proceeds,  condemnation proceeds and
proceeds of insurance policies with respect to the related Contracts. The amount
of principal and interest specified in the related  Prospectus  Supplement to be
distributed  to  Certificateholders  is referred  to herein as the  "Certificate
Distribution  Amount."  The amounts on deposit in the  Certificate  Account on a
Determination  Date, less the amounts  specified in (i) through (iv) above, with
respect to a Series of Certificates having a Class of Subordinated Certificates,
are referred to herein as the "Available Distribution Amount."                  

      On  each  Remittance   Date,  the  Trustee  will  withdraw  the  Available
Distribution Amount from the applicable  Certificate Account and distribute such
amount to the Certificateholders of each Class or other specified persons in the
amounts and order of priority specified in the related Prospectus Supplement.   

      Interest on the  Certificates  will be paid on the dates  specified in the
related Prospectus Supplement (each a "Remittance Date"), commencing on the date
specified  in  the  related  Prospectus   Supplement.   The  related  Prospectus
Supplement  will set forth  for each  Class or  sub-class  of  Certificates  the
interest  rate,  if any,  for each  such  Class or  sub-class  or the  method of
determining  such  interest  rate.  As  specified  in  the  related   Prospectus
Supplement,  Classes of a Series of Certificates  or sub-classes  within a Class
may be entitled to receive no interest                                          

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or  interest  which is not  proportionate  to the  principal  allocable  to such
Certificates.  Principal  collected on each  Contract,  including  any principal
prepayments,  will be  passed  through  on each  Remittance  Date,  unless  such
principal  has  previously  been  passed  through.  With  respect  to a Class or
sub-class of a Series having a Stated Balance, such distributions may be made in
the reduction of the Stated  Balance,  or in such other amounts as are specified
in the related Prospectus Supplement.                                           

      Within the time  specified in the  Agreement  and described in the related
Prospectus  Supplement,  the  Servicer  will  furnish a statement to the Trustee
setting forth the amount to be  distributed  on the related  Remittance  Date on
account of principal and interest,  stated  separately,  and a statement setting
forth certain information with respect to the Contracts.                        

      If there are not sufficient  funds in the Certificate  Account to make the
full distribution to Certificateholders  described above on any Remittance Date,
the  Servicer  will  distribute  the funds  available  for  distribution  to the
Certificateholders  of each Class in accordance  with the  respective  interests
therein, except that Subordinated Certificateholders,  if any, will not, subject
to the limitations described in the related Prospectus  Supplement,  receive any
distributions  until Senior  Certificateholders  receive the Senior Distribution
Amount  plus,  to the extent  not paid,  the  aggregate  of amounts by which the
Senior  Distribution  Amount  for any  Distribution  Date  exceeded  the  amount
actually paid on such  Remittance  Date plus interest at the related  Remittance
Rate.  Unless  otherwise  provided in the  related  Prospectus  Supplement,  the
difference between the amount which the  Certificateholders  would have received
if there had been sufficient  eligible funds in the Certificate  Account and the
amount   actually   distributed,   will  be  added  to  the  amount   which  the
Certificateholders are entitled to receive on the next Remittance Date.         

      A Class or sub-class of Certificates may be Compound Interest Certificates
on which  interest will accrue,  but not be paid for the period set forth in the
related Prospectus Supplement.                                                  

      Special   Distributions.   To  the  extent  specified  in  the  Prospectus
Supplement  relating  to a  Series  of  Certificates,  one or  more  Classes  or
subclasses of which have been assigned a Stated Balance and having less frequent
than monthly  Remittance  Dates, such Classes or sub-classes may receive Special
Distributions in reduction of Stated Balance  ("Special  Distributions")  in any
month,  other than a month in which a Remittance Date occurs, if, as a result of
principal  prepayments  on the  Contracts  in the related  Contract  Pool or low
reinvestment yields, the Trustee determines,  based on assumptions  specified in
the related  Agreement,  that the amount of cash anticipated to be on deposit in
the  Certificate  Account  on the  next  Remittance  Date for  such  Series  and
available to be distributed to the Holders of the  Certificates  of such Classes
or  sub-classes  may be less than the sum of (i) the  interest  scheduled  to be
distributed to holders of the  Certificates  of such Classes or sub-classes  and
(ii) the  amount  to be  distributed  in  reduction  of Stated  Balance  of such
Certificates on such  Remittance  Date. Any such Special  Distributions  will be
made in the same  priority  and manner as  distributions  in reduction of Stated
Balance would be made on the next Remittance Date.                              

      Subordinated  Certificates  and  Reserve  Fund.  The  rights of a Class of
Certificateholders  of a  Series  to  receive  any  or a  specified  portion  of
distributions of principal or interest or both with respect to the Contracts, to
the extent  specified  in the related  Agreement  and  described  in the related
Prospectus   Supplement,   may  be   subordinated   to  such   rights  of  other
Certificateholders.  The  Prospectus  Supplement  with  respect  to a Series  of
Certificates  having a Class of Subordinated  Certificates will set forth, among
other things, the extent to which such Class is subordinated  (which may include
a  formula  for  determining  the  subordinated  amount or for  determining  the
allocation of the Available  Distribution  Amount among Senior  Certificates and
Subordinated  Certificates),  the  allocation  of losses  among the  Classes  of
Subordinated  Certificates  (which  may  include a  reduction  of the  principal
balance  of the  Classes  of  Subordinated  Certificates  in the  event  of such
losses),  the period or periods of such subordination,  the minimum subordinated
amount,  if any, and any distributions or payments which will not be affected by
such  subordination.  If specified  in the related  Prospectus  Supplement,  the
rights of the Subordinated  Certificateholders,  to the extent not subordinated,
may be on a parity  with those  Senior  Certificateholders.  This  subordination
feature is  intended  to enhance  the  likelihood  of regular  receipt by Senior
Certificateholders of the full amount of scheduled monthly payments of principal
and  interest  due them and to  protect  the Senior  Certificateholders  against
losses.                                                                         

      If specified in the related Prospectus Supplement, the protection afforded
to the Senior  Certificateholders from the subordination feature described above
will be effected by the preferential right of such Certificateholders to receive
current distributions from the Contract Pool and, to the extent specified in the
related  Prospectus  Supplement,  by the  establishment  of a reserve  fund (the
"Reserve Fund").  The Reserve Fund may be funded, to the                        

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extent  specified  in the related  Prospectus  Supplement,  by one or more of an
initial cash  deposit,  the  retention of specified  periodic  distributions  of
principal   or   interest   or   both   otherwise    payable   to   Subordinated
Certificateholders, or the provision of a letter of credit, limited guarantee of
CHI,  pool  insurance  policy or any other  form of credit  enhancement,  or any
combination  thereof.  Unless  otherwise  specified  in the  related  Prospectus
Supplement, the Reserve Fund will be part of the Trust Fund.                    

      The  subordination  features  and the  Reserve  Fund  described  above are
intended to enhance the  likelihood of timely  payment of principal and interest
and to protect the Senior Certificateholders and, to the extent specified in the
related Prospectus  Supplement,  Subordinated  Certificateholders  against loss.
However,  in  certain  circumstances  the  Reserve  Fund could be  depleted  and
shortfalls  could result.  If, on a particular  date when a distribution  is due
such  Certificateholders,  the  aggregate  amount of payments  received from the
obligors on the Contracts and Advances by the Servicer (as described  below), if
any,  and from the Reserve Fund of a Series,  if any, do not provide  sufficient
funds to make full  distributions to such  Certificateholders  of a Series,  the
amount of the shortfall may be added to the amount such  Certificateholders  are
entitled to receive on the next Remittance  Date. In the event the Reserve Fund,
if any, is depleted, such Senior Certificateholders and, to the extent specified
in  the   related   Prospectus   Supplement,   Subordinated   Certificateholders
nevertheless  will have a preferential  right to receive  current  distributions
from the Contract Pool. Such  Certificateholders  will bear their  proportionate
share of losses  realized  on  Contracts  to the extent  such  Reserve  Fund and
subordination feature are exhausted.                                            

Advances                                                                        

      If the amount  eligible for  distribution to the  Certificateholders  of a
Series of Certificates (or to Senior  Certificateholders only if so specified in
the  case  of  a  Series  of   Certificates   having  a  Class  of  Subordinated
Certificates)  on any Remittance  Date is less than the amount which is due such
Certificateholders  on such Remittance Date, the related  Agreement will provide
that the Servicer, under certain circumstances,  will make Advances of cash from
its own funds or from excess funds in the Certificate  Account not then required
to   be   distributed   to   Certificateholders,   for   distribution   to   the
Certificateholders  (other than  Subordinated  Certificateholders)  in an amount
equal to the  difference  between  the  amount due to them and the amount in the
Certificate  Account,   eligible  for  distribution  to  them  pursuant  to  the
Agreement,  but only to the extent such difference is due to delinquent payments
of principal  and interest for the  preceding  Due Period and only to the extent
the Servicer  determines such advances are recoverable  from future payments and
collections on the Contracts or otherwise,  as specified in the  Agreement.  The
Servicer's  obligation to make  Advances,  if any, may, be limited in amount and
the  Servicer may not be  obligated  to make  Advances  until all or a specified
portion of the Reserve  Fund,  if any, is  depleted.  Advances  are  intended to
maintain a regular flow of  scheduled  interest  and  principal  payments to the
Senior   Certificateholders,   not  to  guarantee  or  insure  against   losses.
Accordingly,  any funds so  advanced  are  recoverable  by the  Servicer  out of
amounts  received on particular  Contracts  which  represent late  recoveries of
principal or interest  with respect to which any such Advances were made or from
other funds in the Certificate Account.                                         

Example of Distributions                                                        

      The  following  chart  sets  forth an example of the flow of funds for the
Remittance Date occurring in June 1999 for a Class with a fixed  Remittance Rate
in a hypothetical Series of Certificates with a Cut-off Date of April 26, 1999: 

                                                        [Enlarge/Download Table]

                                                                                                                        
April 26, 1999 ................................ (A)  Cut-off Date.                                                      

April 26 to May 25 ............................ (B)  Due Period.  Servicer receives  scheduled payments on the Contracts
                                                     and any  Principal  Prepayments  made by  Obligors  and  applicable
                                                     interest thereon.                                                  

May 31 ........................................ (C)  Record Date.                                                       

June 2 ........................................ (D)  Determination Date.  Distribution amounts determined.              

June 7 ........................................ (E)  Remittance  Date.  (Each  Remittance  Date  is the  7th day of each
                                                     month or, if the 7th day is not a business  day, the next  business
                                                     day.)                                                              

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      The  Original  Contract  Pool  Principal  Balance  will  be the  aggregate
Scheduled  Principal  Balance of the Contracts on April 26, 1999 after deducting
principal payments received before such date. Principal payments received before
April 26, and the accompanying interest payments, are not part of the Trust Fund
and  will not be  passed  through  to  Certificateholders.  Scheduled  payments,
Principal  Prepayments and Net Liquidation  Proceeds may be received at any time
during this period and will be distributed to Certificateholders on June 7. When
a Contract is prepaid in full,  interest on the amount prepaid is collected from
the Obligor only to the date of payment.  The Available  Distribution Amount for
the  distribution on June 7 is described under " -- Payments on Contracts" and "
-- Distributions  on the  Certificates"  above.  Distributions on June 7 will be
made to Certificateholders of record at the close of business on May 31. On June
2 (three  business  days  prior  to the  Remittance  Date),  the  Servicer  will
determine the amounts of principal and interest  which will be passed through on
June 7 to  Certificateholders.  On June 7, the amounts determined on June 2 will
be distributed to Certificateholders.  If a payment due in the Due Period ending
May 25 is received in the Due Period  ending in June,  such late payment will be
taken into account in determining the Available Distribution Amount for July 7. 

      The flow of funds with  respect to any Series of  Certificates  may differ
from the above example, as specified in the related Prospectus Supplement.      

Indemnification                                                                 

      Unless  otherwise  specified  in the related  Prospectus  Supplement,  the
Agreement  requires the  Servicer to defend and  indemnify  the Trust Fund,  the
Trustee (including any agent of the Trustee) and the  Certificateholders  (which
indemnification  will  survive  any  removal of the  Servicer as servicer of the
Contracts)  against any and all costs,  expenses,  losses,  damages,  claims and
liabilities,  including  reasonable fees and expenses of counsel and expenses of
litigation  (a)  arising  from third  party  claims or actions in respect of any
action  taken or failed to be taken by the Servicer or a prior owner of Acquired
Contracts  or servicer on behalf of such owner with  respect to any  Contract or
Manufactured Home, (b) any failure by the Servicer to perform its obligations in
compliance with the standard of care set forth in the Agreement, and (c) for any
taxes which may at any time be asserted  with respect to, and as of the date of,
the  conveyance of the Contracts to the Trust Fund (but not including any income
or  franchise  taxes  or any  federal,  state or other  tax  arising  out of the
creation of the Trust Fund and the issuance of the Certificates or distributions
with respect thereto).                                                          

      Unless  otherwise  specified  in the related  Prospectus  Supplement,  the
Agreement also requires the Servicer,  in connection with its duties as servicer
of the  Contracts,  to defend and indemnify the Trust Fund,  the Trustee and the
Certificateholders  (which  indemnification  will  survive  any  removal  of the
Servicer  as  servicer of the  Contracts)  against any and all costs,  expenses,
losses, damages, claims and liabilities,  including reasonable fees and expenses
of counsel and  expenses of  litigation,  in respect of any action  taken by the
Servicer with respect to any Contract while it was the Servicer.                

Servicing                                                                       

      Pursuant to the  Agreement,  the Servicer will service and  administer the
Contracts  assigned to the Trustee as more fully set forth  below.  The Servicer
will perform diligently all services and duties specified in each Agreement,  in
the  same  manner  as  prudent  lending  institutions  of  manufactured  housing
installment  sales  contracts  of the  same  type  as  the  contracts  in  those
jurisdictions  where the related  Manufactured Homes are located or as otherwise
specified in the  Agreement.  The duties to be  performed  by the Servicer  will
include collection and remittance of principal and interest payments, collection
of insurance claims and, if necessary, repossession. The Agreement provides that
the  Servicer  may  delegate  its  duties  under that  agreement  to one or more
entities (each a "Subservicer") that agrees to conduct such duties in accordance
with the  Agreement.  Notwithstanding  any such  delegation,  the Servicer  will
continue to be liable for all of its obligations under the Agreement.           

      The Servicer will make  reasonable  efforts to collect all payments called
for under the Contracts and, consistent with the Agreement and any FHA insurance
and VA  guaranty,  will follow such  collection  procedures  as it follows  with
respect to mortgage loans or contracts serviced by it that are comparable to the
Contracts.                                                                      

      Hazard  Insurance.  The terms of the Agreement will generally  require the
Servicer to cause to be  maintained  with  respect to each  Contract one or more
Hazard Insurance  Policies which provide,  at a minimum,  the same coverage as a
standard form fire and extended coverage  insurance policy that is customary for
manufactured  housing                                                           

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or one-  to-four  family  residential  properties,  as  applicable,  issued by a
company authorized to issue such policies in the state in which the Manufactured
Home, Modular Home or Mortgaged  Property is located,  and in an amount which is
not less than the maximum  insurable value of such  Manufactured  Home,  Modular
Home or Mortgaged  Property or the principal balance due from the Obligor on the
related  Contract,  whichever  is less;  provided,  however,  that the amount of
coverage  provided by each Hazard  Insurance Policy shall be sufficient to avoid
the application of any coinsurance clause contained therein. When a Manufactured
Home or Modular  Home's  location was, at the time of origination of the related
Contract, within a federally-designated  special flood hazard area, the Servicer
shall also cause such flood insurance to be maintained,  which coverage shall be
at least equal to the minimum amount specified in the preceding sentence or such
lesser  amount as may be available  under the federal flood  insurance  program.
Each Hazard  Insurance  Policy  caused to be  maintained  by the Servicer  shall
contain a standard loss payee clause in favor of the Servicer and its successors
and  assigns.  If any  Obligor is in default in the  payment of  premiums on its
Hazard Insurance Policy or Policies, the Servicer shall pay such premiums out of
its own funds,  and may add separately such premium to the Obligor's  obligation
as  provided  by the  Contract,  but may not add such  premium to the  remaining
principal balance of the Contract.                                              

      The Servicer may maintain,  in lieu of causing individual Hazard Insurance
Policies to be maintained with respect to each Manufactured  Home,  Modular Home
or  Mortgaged  Property,  and shall  maintain,  to the extent  that the  related
Contract does not require the Obligor to maintain a Hazard Insurance Policy with
respect to the related  Manufactured Home,  Modular Home or Mortgaged  Property,
one or more blanket insurance policies covering losses on the Obligor's interest
in the  Contracts  resulting  from the absence or  insufficiency  of  individual
Hazard Insurance Policies. Any such blanket policy shall be substantially in the
form and in the amount carried by the Servicer as of the date of this Agreement.
The  Servicer  shall pay the  premium  for such  policy  on the basis  described
therein and shall pay any  deductible  amount with  respect to claims under such
policy relating to the Contracts.  If the insurer  thereunder  shall cease to be
acceptable  to the Servicer,  the Servicer  shall  exercise its best  reasonable
efforts to obtain from another  insurer a placement  policy  comparable  to such
policy.                                                                         

      If the Servicer shall have  repossessed a  Manufactured  Home on behalf of
the Trustee,  the Servicer  shall either (i)  maintain,  at its expense,  hazard
insurance with respect to such Manufactured  Home, or (ii) indemnify the Trustee
against  any  damage  to  such  Manufactured  Home  prior  to  resale  or  other
disposition.                                                                    

      Evidence as to  Compliance.  Each  Agreement  will require the Servicer to
deliver to the Trustee a monthly report prior to each Remittance  Date,  setting
forth certain  information  regarding the Contract Pool and Certificates of such
Series as is specified in the related Prospectus Supplement. Each such report to
the Trustee will be accompanied  by a statement  from an appropriate  officer of
the  Servicer  certifying  the  accuracy  of such  report and  stating  that the
Servicer  has not  defaulted in the  performance  of its  obligations  under the
Agreement.  The  Servicer  will  deliver to the  Trustee  an annual  report of a
nationally  recognized  accounting  firm  stating  that such  firm has  examined
certain documents and records relating to the servicing of manufactured  housing
contracts  serviced  by the  Servicer  under  pooling and  servicing  agreements
similar to the Agreement and stating that, on the basis of such procedures, such
servicing has been conducted in compliance  with the  Agreement,  except for any
exceptions set forth in such report.                                            

      Certain Matters  Regarding the Servicer.  The Servicer may not resign from
its obligations and duties under an Agreement  except upon a determination  that
its duties  thereunder are no longer  permissible  under applicable law. No such
resignation will become effective until the Trustee or a successor  servicer has
assumed the Servicer's obligations and duties under such Agreement. The Servicer
can only be removed as servicer pursuant to an Event of Termination as discussed
below.  Any person  with which the  Servicer is merged or  consolidated,  or any
corporation resulting from any merger,  conversion or consolidation to which the
Servicer is a party,  or any person  succeeding to the business of the Servicer,
will be the  successor  to the  Servicer  under  the  Agreement  so long as such
successor services at least $100 million of manufactured housing contracts.     

      Each Agreement will also generally provide that neither the Servicer,  nor
any  director,  officer,  employee or agent of the  Servicer,  will be under any
liability  to the Trust Fund or the  Certificateholders  for any action taken or
for  restraining  from the taking of any action in good  faith  pursuant  to the
Agreement,  or for errors in  judgment;  provided,  however,  that  neither  the
Servicer nor any such person will be protected against any liability which would
otherwise  be imposed by reason of the  failure to perform  its  obligations  in
strict  compliance  with the standards of care set forth in the  Agreement.  The
Servicer  may, in its  discretion,  undertake  any such action which it may deem

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necessary or desirable  with respect to the  Agreement and the rights and duties
of the parties thereto and the interests of the  Certificateholders  thereunder.
In such event,  the legal  expenses  and costs of such action and any  liability
resulting  therefrom will be expenses,  costs and  liabilities of the Trust Fund
and  the  Servicer  will  be  entitled  to be  reimbursed  therefor  out  of the
Certificate Account.                                                            

      Except  for  certain   representations  and  warranties  relating  to  the
contracts and certain other exceptions,  the Servicer's obligations with respect
to the Certificates are limited to its contractual servicing obligations.       

      The Servicer shall keep in force throughout the term of this Agreement (i)
a policy or policies of insurance  covering  errors and omissions for failure to
maintain insurance as required by this Agreement, and (ii) a fidelity bond. Such
policy or policies and such fidelity bond shall be in such form and amount as is
generally  customary  among persons  which  service a portfolio of  manufactured
housing  contracts having an aggregate  principal amount of $100 million or more
and which are  generally  regarded  as  servicers  acceptable  to  institutional
investors.                                                                      

      The Servicer,  to the extent practicable,  shall cause the Obligors to pay
all taxes and similar  governmental  charges when and as due. To the extent that
nonpayment  of any taxes or charges  would result in the creation of a lien upon
any  Manufactured  Home  having a  priority  equal or  senior to the lien of the
related Contract, the Servicer shall advance any such delinquent tax or charge. 

      Servicing  Compensation and Payment of Expenses.  For its servicing of the
Contracts,  the Servicer will receive  servicing fees  ("Servicing  Fees") which
include a Monthly  Servicing  Fee (which the  Servicer  may assign) for each Due
Period (paid on the next succeeding  Remittance  Date) which,  unless  otherwise
stated  in the  related  Prospectus  Supplement,  will be equal to 1/12th of the
product of 1.25% and the Pool Scheduled  Principal  Balance for such  Remittance
Date.                                                                           

      The Monthly Servicing Fee provides compensation for customary manufactured
housing  contract  third-party  servicing  activities  to be  performed  by  the
Servicer for the Trust Fund and for additional administrative services performed
by the  Servicer on behalf of the Trust  Fund.  Customary  servicing  activities
include  collecting  and  recording   payments,   communicating  with  obligors,
investigating  payment  delinquencies,  providing  billing  and tax  records  to
obligors  and  maintaining  internal  records  with  respect  to each  Contract.
Administrative  services  performed  by the Servicer on behalf of the Trust Fund
include calculating  distributions of  Certificateholders  and providing related
data processing and reporting services for  Certificateholders  and on behalf of
the Trustee. Expenses incurred in connection with the servicing of the Contracts
and paid by the Servicer from its Servicing  Fees include,  without  limitation,
payment of fees and expenses of  accountants,  payments of all fees and expenses
incurred in connection  with the  enforcement of Contracts  (except  Liquidation
Expenses) and payment of expenses incurred in connection with  distributions and
reports  to  Certificateholders.  The  Servicer  will be  reimbursed  out of the
Liquidation  Proceeds of a Liquidated  Contract  for all ordinary and  necessary
Liquidation Expenses incurred by it in realization upon the related Manufactured
Home.                                                                           

      So long as the  Vanderbilt  is the  Servicer,  the  Servicer,  in its sole
discretion,  may, but is not  obligated  to,  liquidate a defaulted  Contract by
depositing into the  Certificate  Account an amount equal to (i) the outstanding
principal  balance of such Contract plus accrued and unpaid interest  thereon to
the Due Date in the Due Period in which such  deposit is made less (ii)  $2,000.
Vanderbilt  will not be  reimbursed  for any  Liquidation  Expenses  incurred in
connection  with any such Contract and will retain any  liquidation  proceeds in
respect thereof.  Vanderbilt has such option to liquidate defaulted Contracts in
that manner  because  such manner of  liquidation  is more  compatible  with its
record keeping systems.                                                         

      As part of its  Servicing  Fees the  Servicer  will  also be  entitled  to
retain,  as  compensation  for the  additional  services  provided in connection
therewith,  any fees for late payments made by Obligors,  extension fees paid by
Obligors  for the  extension  of  scheduled  payments  and  assumption  fees for
permitted  assumptions  of Contracts by purchasers  of the related  Manufactured
Homes.                                                                          

      Any  person  with which the  Servicer  is merged or  consolidated,  or any
corporation resulting from any merger,  conversion or consolidation to which the
Servicer is a party,  or any person  succeeding to the business of the Servicer,
will be the  successor  to the  Servicer  under  the  Agreement  so long as such
successor has a net worth of at least $10 million and has serviced at least $100
million of  manufactured  housing  contracts for at least one year. The Servicer
may assign its rights and  delegate  its duties  under the  Agreement  (with the
prior written  consent of the Company if the  Vanderbilt  is not the  Servicer),
provided that any rating of the Certificates  then in effect will not be reduced

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because  of such  assignment  and  delegation.  Upon  any  such  assignment  and
delegation,  the assigning  Servicer will not be liable for  obligations  of the
Servicer after such assignment.                                                 

      Events of  Termination.  Events of  Termination  under each Agreement will
include (i) any failure by the Servicer to distribute to the  Certificateholders
any required payment which continues unremedied for 5 days (or such other period
specified  in the  related  Prospectus  Supplement)  after the giving of written
notice;  (ii) any  failure  by the  Servicer  duly to  observe or perform in any
material  respect any other of its covenants or agreements in the Agreement that
materially and adversely affects the interests of Certificateholders,  which, in
either case, continues unremedied for 30 days after the giving of written notice
of such failure or breach; and (iii) certain events of insolvency,  readjustment
of debt,  marshalling of assets and liabilities or similar proceedings regarding
the  Servicer.  Notice as used herein  shall mean notice to the  Servicer by the
Trustee or the Company, or to the Company, the Servicer, if any, and the Trustee
by the Holders of Certificates  representing interests aggregating not less than
25% of the Trust Fund.                                                          

      Rights  Upon  Event of  Termination.  So long as an  Event of  Termination
remains  unremedied,  the  Trustee  may,  and at the  written  direction  of the
Certificateholders  of a Series evidencing interests  aggregating 25% or more of
the related Trust Fund, shall terminate all of the rights and obligations of the
Servicer  under  the  related  Agreement  and in and to the  Contracts,  and the
proceeds thereof,  whereupon  (subject to applicable law regarding the Trustee's
ability  to make  advances)  the  Trustee  or a  successor  Servicer  under  the
Agreement will succeed to all the  responsibilities,  duties and  liabilities of
the Servicer  under the Agreement  and will be entitled to similar  compensation
arrangements;  provided,  however,  that  neither the Trustee nor any  successor
servicer will assume any  obligation of the Company to repurchase  Contracts for
breaches of  representations  or warranties,  and the Trustee will not be liable
for any acts or omissions of the Servicer  occurring  prior to a transfer of the
Servicer's  servicing and related functions or for any breach by the Servicer of
any  of  its  obligations  contained  in  the  Agreement.  Notwithstanding  such
termination,  the  Servicer  shall be  entitled  to payment  of certain  amounts
payable to it prior to such  termination,  for services  rendered  prior to such
termination.  No such  termination  will  affect  in any  manner  the  Company's
obligation to repurchase  certain Contracts for breaches of  representations  or
warranties under the Agreement. In the event that the Trustee would be obligated
to succeed the Servicer but is unwilling or unable so to act, it may appoint, or
petition to a court of competent jurisdiction for the appointment of a Servicer.
Pending such appointment,  the Trustee is obligated to act in such capacity. The
Trustee and such successor may agree upon the servicing compensation to be paid,
which in no event may be greater than the compensation to the Servicer under the
Agreement. If the trustee in bankruptcy or similar official is appointed for the
Servicer,  and no Event of Termination other than the Servicer's  insolvency has
occurred,  such  trustee or other  official  may have the power to  prevent  the
Trustee from effecting a transfer of servicing.                                 

      No  Certificateholder  will have any right under an Agreement to institute
any proceeding with respect to such Agreement unless such Holder  previously has
given to the  Trustee  written  notice of  default  and  unless  the  Holders of
Certificates  evidencing interests  aggregating not less than 25% of the related
Trust Fund requested the Trustee in writing to institute such  proceeding in its
own name as Trustee and have offered to the Trustee reasonable indemnity and the
Trustee for 60 days has neglected or refused to institute  any such  proceeding.
The Trustee will be under no obligation to take any action or institute, conduct
or defend any litigation under the Agreement at the request,  order or direction
of any of the  Holders of  Certificates,  unless  such  Certificateholders  have
offered to the  Trustee  reasonable  security  or  indemnity  against the costs,
expenses and liabilities which the Trustee may incur.                           

Reports to Certificateholders                                                   

      The  Servicer  or  the  Trustee,  as  applicable,  will  forward  to  each
Certificateholder  on  each  Remittance  Date,  or  as  soon  thereafter  as  is
practicable,  as specified  in the related  Prospectus  Supplement,  a statement
setting forth, among other things:                                              

                (i) the amount of such  distribution  allocable  to principal on
the Certificates;                                         

                (ii) the amount of such  distribution  allocable  to interest on
the Certificates;                                         

                (iii) if the distribution to the Certificateholders is less than
           the   full   amount   that   would   be    distributable    to   such
           Certificateholders  if there were  sufficient  eligible  funds in the
           Certificate  Account, the difference between the aggregate amounts of
           principal and interest which  Certificateholders  would have received
           if there were sufficient  eligible funds in the  Certificate  Account
and the amounts actually distributed;                     

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                (iv) the aggregate  amount of Advances,  if any, by the Servicer
           included   in   the    amounts    actually    distributed    to   the
Certificateholders;                                       

           (v) the outstanding principal balance of the Contracts; and

                (vi) the  approximate  weighted  average  Remittance Rate of the
           Contracts during the Due Period immediately preceding such Remittance
Date.                                                     

      In addition,  not more than 90 days after the end of each  calendar  year,
the Servicer  will furnish a report to each  Certificateholder  of record at any
time during  such  calendar  year (a) as to the  aggregate  of amounts  reported
pursuant  to (i) and (ii)  above for such  calendar  year or, in the event  such
person was a Certificateholder of record during a portion of such calendar year,
for the  applicable  portion  of such  year,  and (b)  such  information  as the
Servicer deems  necessary or desirable for  Certificateholders  to prepare their
tax  returns.  Information  in the  monthly and annual  reports  provided to the
Certificateholders  will  not  have  been  examined  and  reported  upon  by  an
independent public accountant. However, the Servicer will provide to the Trustee
annually  a  report  by  independent  public  accountants  with  respect  to the
servicing of the Contracts as described under "Evidence as to Compliance" above.

Amendment                                                                       

      The  Agreement  may be amended by the Company and the Trustee  without the
consent of the Certificateholders, (i) to cure any ambiguity, (ii) to correct or
supplement  any  provision  therein  that may be  inconsistent  with  any  other
provision therein,  (iii) if an election (a "REMIC Election") has been made with
respect to a particular Series of Certificates to treat the Trust Fund as a real
estate  mortgage  investment  conduit  ("REMIC")  within the  meaning of Section
860D(a) of the Code, to maintain the REMIC status of the Trust Fund and to avoid
the  imposition  of  certain  taxes  on the  REMIC  or (iv) to  make  any  other
provisions  with respect to matters or questions  arising  under such  Agreement
that are not inconsistent with the provisions thereof, provided that such action
will  not  adversely  affect  in  any  material  respect  the  interests  of the
Certificateholders  of the related Series.  The Agreement may also be amended by
the   Company,   the   Servicer   and  the  Trustee  with  the  consent  of  the
Certificateholders  (other  than  holders of Residual  Certificates)  evidencing
interests  aggregating  not less than 51% of the Trust  Fund for the  purpose of
adding any  provisions  to or changing in any manner or  eliminating  any of the
provisions  of such  Agreement  or of  modifying in any manner the rights of the
Certificateholders;  provided,  however,  that no such amendment that reduces in
any manner the amount  of, or delay the timing of, any  payment  received  on or
with  respect  to  Contracts  which  are  required  to  be  distributed  on  any
Certificate  may be  effective  without  the consent of the holders of each such
Certificate.                                                                    

Termination of the Agreement                                                    

      The  obligations  created by each  Agreement  will terminate upon the date
calculated as specified in the  Agreement,  generally  upon (i) the later of the
final payment or other liquidation of the last Contracts subject thereto and the
disposition  of all property  acquired  upon  foreclosure  of any  Land-and-Home
Contract or Mortgage Loan or repossession of any Manufactured  Home and (ii) the
payment to the  Certificateholders  of all amounts  held by the  Servicer or the
Trustee and  required to be paid to it pursuant to the  Agreement.  In addition,
the  Company or the  Servicer  may at its option  with  respect to any Series of
Certificates,  repurchase all Certificates or Contracts remaining outstanding at
such time as the aggregate  unpaid  principal  balance of such Contracts is less
than the percentage of the aggregate unpaid  principal  balance of the Contracts
on the  Cut-off  Date  specified  with  respect  to such  Series in the  related
Prospectus  Supplement.  Unless  otherwise  provided in the  related  Prospectus
Supplement,  the  repurchase  price  will  equal  the  principal  amount of such
Contracts plus accrued interest from the first day of the month of repurchase to
the first day of the next  succeeding  month at the Contract Rates borne by such
Contracts.                                                                      

The Trustee                                                                     

      The Prospectus  Supplement for a Series of  Certificates  will specify the
Trustee  under the  related  Agreement.  The  Trustee  may have  normal  banking
relationships  with  the  Company  or its  affiliates  and the  Servicer  or its
affiliates.                                                                     

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      The  Trustee may resign at any time,  in which  event the Company  will be
obligated  to appoint a  successor  Trustee.  The  Company  may also  remove the
Trustee if the  Trustee  ceases to be  eligible  to  continue  as such under the
Agreement or if the Trustee becomes  insolvent.  The Trustee may also be removed
at any time by the holders of Certificates evidencing interests aggregating over
50% of the related Trust Fund as specified in the Agreement.  Any resignation or
removal of the Trustee and  appointment  of a successor  Trustee will not become
effective until acceptance of the appointment by the successor Trustee.         

      The Trustee will make no  representation as to the validity or sufficiency
of the Agreement, the Certificates,  any Contract,  Contract file, Land-and-Home
Contract  file,  Mortgage  Loan  file or  related  documents,  and  will  not be
accountable  for the use or  application by the Company of any funds paid to the
Company,  as Seller,  in  consideration  of the conveyance of the Contracts,  or
deposited  into or withdrawn  from the  Certificate  Account by the Company,  as
Servicer. If no Event of Termination has occurred,  the Trustee will be required
to perform only those duties  specifically  required of it under the  Agreement.
However, upon receipt of the various certificates,  reports or other instruments
required to be  furnished to it, the Trustee will be required to examine them to
determine  whether they conform as to form to the requirements of the Agreement.
Whether or not an Event of Termination has occurred, the Trustee is not required
to expend or risk its own funds or otherwise  incur any  financial  liability in
the performance of its duties or the exercise of its powers if it has reasonable
grounds to believe that  repayment of such funds or adequate  indemnity  against
such risk or liability is not reasonably assured to it.                         

      Under the  Agreement,  the Servicer,  agrees to pay to the Trustee on each
Remittance  Date (a)  reasonable  compensation  for all services  rendered by it
hereunder  (which  compensation  shall not be limited by any provision of law in
regard  to  the  compensation  of a  trustee  of  any  express  trust)  and  (b)
reimbursement for all reasonable  expenses,  disbursements and advances incurred
or made by the  Trustee  in  accordance  with  any  provision  of the  Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense,  disbursement or advance as may be
attributable to the Trustee's negligence or bad faith. The Company has agreed to
indemnify the Trustee for, and to hold it harmless against,  any loss, liability
or expense incurred without  negligence or bad faith on its part, arising out of
or in connection with the acceptance or administration of the Trust Fund and the
Trustee's  duties  thereunder,  including  the costs and  expenses of  defending
itself  against  any claim or  liability  in  connection  with the  exercise  or
performance of any of the Trustee's powers or duties thereunder.                

DESCRIPTION OF FHA INSURANCE AND VA GUARANTEES

      Certain  of  the  Contracts,  may be  FHA-insured  or  VA-guaranteed,  the
payments upon which, subject to the following discussion, are insured by the FHA
under Title I of the National Housing Act or partially guaranteed by the VA.    

      The regulations  governing FHA  manufactured  home insurance  provide that
insurance  benefits  are  payable  upon  the  repossession  and  resale  of  the
collateral  and  assignment of the contract to the United  States  Department of
Housing and Urban Development ("HUD"). With respect to a defaulted FHA contract,
the servicer must follow applicable  regulations before initiating  repossession
procedures.  These  regulations  include  requirements that the lender arrange a
face-to-face  meeting with the borrower,  initiate a  modification  or repayment
plan, if feasible, and give the borrower 30 days' notice of default prior to any
repossession.  The  insurance  claim  is paid in cash by HUD.  For  manufactured
housing  contracts,  the amount of insurance  benefits  generally paid by FHA is
equal to 90% of the sum of (i) the unpaid  principal  amount of the  Contract at
the date of  default  and  uncollected  interest  earned to the date of  default
computed at the Contract Rate, after deducting the best price obtainable for the
collateral (based in part on a HUD-approved  appraisal) and all amounts retained
or collected by the lender from other sources with respect to the Contract, (ii)
accrued and unpaid  interest on the unpaid  amount of the Contract from the date
of default to the date of  submission of the claim plus 15 calendar days (but in
no event more than nine months) computed at a rate of 7% per annum,  (iii) costs
paid to a dealer or other third party to repossess and preserve the Manufactured
Home,  (iv) the amount of any sales  commission  paid to a dealer or other third
party for the  resale  of the  property,  (v) with  respect  to a  Land-and-Home
Contract,  property  taxes,  special  assessments  and other similar charges and
hazard insurance premiums,  prorated to the date of disposition of the property,
(vi) uncollected  court costs,  (vii) legal fees, not to exceed $500, and (viii)
expenses for  recording  the  assignment  of the lien on the  collateral  to the
United States.                                                                  

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      The insurance available to a lender under FHA Title I insurance is subject
to the limit of a reserve amount equal to ten percent of the original  principal
balance of all Title I insured loans  originated by the lender,  which amount is
reduced by all  claims  paid to the  lender  and by an annual  reduction  in the
reserve amount of ten percent of the reserve  amount,  and which is increased by
an amount  equal to ten  percent of the  original  principal  balance of insured
loans subsequently  originated by the lender. As of June 30, 1999,  Vanderbilt's
Title I reserve amount was approximately $16,453,660, which amount was available
to  pay  claims  in  respect  of   approximately   $161,446,977  of  FHA-insured
manufactured  housing  contracts  serviced by  Vanderbilt.  If  Vanderbilt  were
replaced as Servicer of the Contracts under the Agreement,  it is not clear from
the FHA  regulations  what portion of this reserve amount would be available for
claims in respect of the FHA-insured Contracts.  The obligation to pay insurance
premiums to FHA is the obligation of Vanderbilt,  as servicer of the FHA-insured
Contracts.                                                                      

      The  maximum  guarantee  that may be issued by the VA for a  VA-guaranteed
contract  is the lesser of (a) the lesser of  $20,000  and 40% of the  principal
amount  of the  contract  and (b) the  maximum  amount of  guaranty  entitlement
available to the obligor  veteran  (which may range from  $20,000 to zero).  The
amount  payable  under the  guarantee  will be a  percentage  of the VA contract
originally  guaranteed applied to indebtedness  outstanding as of the applicable
date of computation  specified in the VA  regulations,  interest  accrued on the
unpaid balance of the loan to the  appropriate  date of computation  and limited
expenses of the contract  holder,  but in each case only to the extent that such
amounts have not been  recovered  through resale of the  manufactured  home. The
amount  payable  under  the  guarantee  may  in no  event  exceed  the  original
guarantee.                                                                      

CERTAIN LEGAL ASPECTS OF THE CONTRACTS

      The following  discussion  contains  summaries of certain legal aspects of
Manufactured  Housing  Contracts,  Land-and-Home  Contracts and Mortgage  Loans,
which are  general in  nature.  Because  such  legal  aspects  are  governed  by
applicable state law (which laws may differ substantially), the summaries do not
purport to be  complete  nor reflect the laws of any  particular  state,  nor to
encompass  the laws of all  states in which the  security  for the  Manufactured
Housing Contracts,  Land-and-Home  Contracts or Mortgage Loans is situated.  The
summaries are qualified in their entirety by reference to the applicable federal
and state laws  governing  the  Manufactured  Housing  Contracts,  Land-and-Home
Contracts or Mortgage Loans.                                                    

The Manufactured Housing Contracts                                              

      General.  As a result of the  assignment  of the Contracts to the Trustee,
the Trust Fund will succeed  collectively  to all of the rights  (including  the
right to receive payment on the Contacts) and will assume the obligations of the
obligee under the Contracts.  Each Manufactured  Housing Contract evidences both
(a) the obligation of the Obligor to repay the loan evidenced  thereby,  and (b)
the grant of a security interest in the Manufactured Home to secure repayment of
such  loan.  Certain  aspects  of  both  features  of the  Manufactured  Housing
Contracts are described more fully below.                                       

      The  Manufactured  Housing  Contracts  generally  are  "chattel  paper" as
defined in the  Uniform  Commercial  Code (the "UCC") in effect in the states in
which the Manufactured Homes initially were registered. Pursuant to the UCC, the
sale of chattel paper is treated in a manner similar to perfection of a security
interest  in chattel  paper.  Under the  Agreement,  the  Servicer  will  retain
possession of the Manufactured  Housing  Contracts (other than the Land-and-Home
Contracts) as custodian for the Trustee,  and will make an appropriate filing of
a UCC-1  financing  statement  in  Tennessee  to give  notice  of the  Trustee's
ownership  of the  Manufactured  Housing  Contracts.  The  Manufactured  Housing
Contracts  will be stamped to reflect their  assignment  from the Company to the
Trustee.  However,  if through  negligence,  fraud,  or otherwise,  a subsequent
purchaser  were able to take  physical  possession of the  Manufactured  Housing
Contracts  without  notice of such  assignment,  the Trustee's  interest in such
Contracts could be defeated.                                                    

      Security  Interests in the  Manufactured  Homes.  The  Manufactured  Homes
securing the Manufactured  Housing Contracts may be located in all 50 states and
the  District of Columbia and Puerto Rico.  Security  interests in  manufactured
homes may be  perfected  either by notation of the secured  party's  lien on the
certificate  of title or by delivery of the required  documents and payment of a
fee to the state  motor  vehicle  authority,  depending  on state  law.  In some
nontitle states,  perfection  pursuant to the provisions of the UCC is required.
Vanderbilt effects such notation or delivery of the required documents and fees,
and obtains  possession of the  certificate of title,  as                       

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appropriate  under  the  laws  of the  state  in  which a  Manufactured  Home is
registered.  In the event Vanderbilt  fails,  due to clerical errors,  to effect
such notation or delivery,  or files the security  interest  under the wrong law
(for example,  under a motor vehicle title statute rather than under the UCC, in
a few states),  the  Certificateholders  may not have a first priority  security
interest in the Manufactured Home securing a Manufactured  Housing Contract.  As
manufactured  homes have  become  larger and have been  attached  to their sites
without any  apparent  intention  to move them,  courts in many states have held
that manufactured homes, under certain circumstances, may become subject to real
estate  title  and  recording  laws.  As a  result,  a  security  interest  in a
manufactured  home  could be  rendered  subordinate  to the  interests  of other
parties claiming an interest in the home under applicable state real estate law.
In order to perfect a security interest in a manufactured home under real estate
laws,  the holder of the security  interest must file either a "fixture  filing"
under the provision of the UCC or a real estate  mortgage  under the real estate
laws of the state where the home is located.  See  "Land-and-Home  Contracts and
Mortgage  Loans" below.  These  filings must be made in the real estate  records
office  of the  county  where  the  home is  located.  Substantially  all of the
Manufactured Housing Contracts contain provisions  prohibiting the borrower from
attaching  the  Manufactured  Home to its site. So long as the borrower does not
violate this agreement,  a security  interest in the  Manufactured  Home will be
governed by the  certificate  of title laws or the UCC,  and the notation of the
security interest on the certificate of title or the filing of the UCC financing
statement will be effective to maintain the priority of the security interest in
the Manufactured  Home. If, however, a Manufactured Home becomes attached to its
site, other parties could obtain an interest in the  Manufactured  Home which is
prior  to  the  security  interest  originally  retained  by the  seller  of the
Manufactured  Housing Contracts and transferred to the Company. The Company will
represent that at the date of the initial  issuance of the related  Certificates
it has obtained a perfected first priority  security interest by proper notation
or delivery of the required documents and fees with respect to substantially all
of the Manufactured Homes securing the Manufactured Housing Contracts.          

      The Company will assign the security interest in the Manufactured Homes to
the  Trustee on behalf of the  Certificateholders.  Neither  the Company nor the
Trustee will amend the  certificates of title to identify the Trustee as the new
secured  party,  and  neither  the Company  nor the  Servicer  will  deliver the
certificates  of  title to the  Trustee  or note  thereon  the  interest  of the
Trustee.  Accordingly, the Company, or such other originator of the Manufactured
Housing  Contracts as provided herein,  will continue to be named as the secured
party on the certificates of title relating to the  Manufactured  Homes. In some
states,  such  assignment is an effective  conveyance of such security  interest
without amendment of any lien noted on the related  certificate of title and the
new  secured  party  succeeds  to the  Company's  rights as the  secured  party.
However,  in some states in the absence of an  amendment to the  certificate  of
title, such assignment of the security interest in the Manufactured Home may not
be held  effective or such  security  interests  may not be perfected and in the
absence of such  notation or  delivery to the  Trustee,  the  assignment  of the
security  interest  in  the  Manufactured  Home  may  not be  effective  against
creditors of the Company or a trustee in bankruptcy of the Company.             

      In the absence of fraud, forgery or affixation of the Manufactured Home to
its  site by the  Manufactured  Home  owner,  or  administrative  error by state
recording officials,  the notation of the lien of the Company on the certificate
of title or delivery of the required  documents  and fees will be  sufficient to
protect the Certificateholders  against the rights of subsequent purchasers of a
Manufactured  Home or  subsequent  lenders  who take a security  interest in the
Manufactured Home. If there are any Manufactured Homes as to which the Company's
security interest is not perfected,  such security interest would be subordinate
to, among others,  subsequent purchasers for value of the Manufactured Homes and
holders  of  perfected  security  interests.  There  also  exists  a risk in not
identifying  the Trustee as the new secured  party on the  certificate  of title
that, through fraud or negligence, the security interest of the Trustee could be
released.                                                                       

      In the event  that the owner of a  Manufactured  Home  moves it to a state
other than the state in which such  Manufactured  Home  initially is registered,
under  the  laws of  certain  states  the  perfected  security  interest  in the
Manufactured  Home would  continue  for four months  after such  relocation  and
thereafter only if and after the owner  re-registers  the  Manufactured  Home in
such state.  If the owner were to relocate a Manufactured  Home to another state
and not re-register the  Manufactured  Home in such state, and if steps were not
taken to re-perfect the Trustee's  security interest in such state, the security
interest in the  Manufactured  Home would cease to be  perfected.  A majority of
states  generally  require  surrender of a certificate of title to re-register a
Manufactured  Home;  accordingly,  the Company must  surrender  possession if it
holds  certificate  of  title  to such  Manufactured  Home  or,  in the  case of
Manufactured  Homes registered in states which provide for notation of lien, the
Company  would  receive  notice of  surrender  if the  security  interest in the
Manufactured Home is noted on the certificate of title.                         

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Accordingly,  the Company would have the  opportunity to re-perfect its security
interest in the Manufactured Home in the state of relocation. In states which do
not require a certificate  of title for  registration  of a  Manufactured  Home,
re-registration could defeat perfection. In the ordinary course of servicing the
manufactured  housing  conditional  sales contracts,  the Company takes steps to
effect  such   re-perfection  upon  receipt  of  notice  of  re-registration  or
information from the obligor as to relocation. Similarly when an Obligor under a
Contract sells a Manufactured Home, the Company must surrender possession of the
certificate  of title or will  receive  notice  as a  result  of its lien  noted
thereon and accordingly will have an opportunity to require  satisfaction of the
related  manufactured  housing  conditional sales contract before release of the
lien.  Under the Agreement,  the Company is obligated to take such steps, at the
Company's expense, as are necessary to maintain perfection of security interests
in the Manufactured Homes.                                                      

      Under  the  laws  of  most  states,  liens  for  repairs  performed  on  a
Manufactured  Home and liens for  personal  property  taxes take  priority  over
perfected security  interests.  The Company will represent in the Agreement that
it has no  knowledge  of any such liens with  respect to any  Manufactured  Home
securing  payment on any Contract.  However,  such liens could arise at any time
during  the term of the  Contract.  No notice  will be given to the  Trustee  or
Certificateholders in the event such a lien arises.                             

      Enforcement of Security  Interests in Manufactured  Homes. The Servicer on
behalf of the Trustee, to the extent required by the related Agreement, may take
action to enforce the Trustee's  security  interest with respect to Contracts in
default by  repossession  and resale of the  Manufactured  Homes  securing  such
Defaulted Contracts.  So long as the Manufactured Home has not become subject to
real estate  laws,  a creditor  can  repossess a  Manufactured  Home  securing a
Contract by voluntary surrender, by "self-help"  repossession that is "peaceful"
(i.e.,  without  breach of the peace) or, in the absence of voluntary  surrender
and the ability to repossess  without breach of the peace, by judicial  process.
The holder of a Contract  must give the debtor a number of days'  notice,  which
varies from 10 to 30 days depending on the state,  prior to  commencement of any
repossession.  The UCC  and  consumer  protection  laws  in  most  states  place
restrictions  on  repossession  sales,  including  requiring prior notice to the
debtor and commercial  reasonableness  in effecting such a sale. The law in most
states also requires that the debtor be given notice of any sale prior to resale
of the unit so that the debtor may redeem at or before such resale. In the event
of such  repossession  and resale of a  Manufactured  Home, the Trustee would be
entitled  to be paid out of the sale  proceeds  before  such  proceeds  could be
applied to the payment of the claims of  unsecured  creditors  or the holders of
subsequently perfected security interests or, thereafter, to the debtor.        

      Under the laws applicable in most states, a creditor is entitled to obtain
a deficiency  judgment  from a debtor for any  deficiency  on  repossession  and
resale of the  manufactured  home securing such a debtor's loan.  However,  some
states impose  prohibitions  or  limitations  on  definitions  or limitations on
deficiency  judgments,  and in many cases the defaulting  borrower would have no
assets with which to pay a judgment.                                            

      Certain other statutory provisions, including federal and state bankruptcy
and insolvency  laws and general  equitable  principles,  may limit or delay the
ability of a lender to repossess  and resell  collateral or enforce a deficiency
judgment.                                                                       

      Under the terms of the federal  Soldier's and Sailor's Civil Relief Act of
1940,  as amended (the "Relief  Act"),  an Obligor who enters  military  service
after the origination of such Obligor's Contract  (including an Obligor who is a
member  of the  National  Guard  or is in  reserve  status  at the  time  of the
origination  of the  Contract  and is later  called to  active  duty) may not be
charged  interest above an annual rate of 6% during the period of such Obligor's
active duty status,  unless a court orders  otherwise  upon  application  of the
lender.  It  is  possible  that  such  action  could  have  an  effect,  for  an
indeterminate  period of time,  on the ability of the  Servicer to collect  full
amounts of  interest  on certain of the  Contracts.  Any  shortfall  in interest
collections  resulting from the application of the Relief Act, to the extent not
covered by the  subordination  of a Class of  Subordinated  Certificates,  could
result in losses to the holders of a Series of  Certificates.  In addition,  the
Relief Act imposes limitations which would impair the ability of the Servicer to
foreclose on an affected  Contract  during the  Obligor's  period of active duty
status. Thus, in the event that such a Contract goes into default,  there may be
delays and losses  occasioned by the inability to realize upon the  Manufactured
Home in a timely fashion.                                                       

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Land-and-Home Contracts and Mortgage Loans                                      

      General. The Land-and-Home Contracts and Mortgage Loans will be secured by
either first  mortgages or deeds of trust,  depending upon the applicable law in
the state in which the underlying property is located. A mortgage creates a lien
upon the real  property  described in the  mortgage.  There are two parties to a
mortgage:  the mortgagor,  who is the borrower,  and the  mortgagee,  who is the
lender.  In a mortgage  state,  the mortgagor  delivers to the mortgagee a note,
bond or other instrument  evidencing the loan and the mortgage.  Although a deed
of trust is  similar  to a  mortgage,  a deed of trust  has three  parties:  the
borrower, a lender as beneficiary, and a third-party grantee called the trustee.
Under the deed of trust, the borrower conveys title to the property, irrevocably
until the debt is paid, in trust, generally with a power of sale, to the trustee
to secure payment of the loan. The trustee's authority under a deed of trust and
the  mortgagee's  authority  under  a  mortgage  are  governed  by  the  express
provisions of the deed of trust or mortgage, applicable law, and, in some cases,
with respect to the deed of trust, the directions of the beneficiary.           

      Foreclosure.  Foreclosure  of a  mortgage  is  generally  accomplished  by
judicial  action.  Generally,  the  action  is  initiated  by  service  of legal
pleadings  upon all parties  having an interest of record in the real  property.
Delays  in  completion  of  the   foreclosure   occasionally   may  result  from
difficulties  in  locating  necessary  parties.  When the  mortgagee's  right to
foreclosure is contested,  the legal proceedings  necessary to resolve the issue
can  be  time-consuming  and  expensive.  After  the  completion  of a  judicial
foreclosure  proceeding,  the court  may issue a  judgment  of  foreclosure  and
appoint a receiver or other officer to conduct the sale of the property. In some
states,  mortgages may also be foreclosed by advertisement,  pursuant to a power
of sale provided in the mortgage.  Foreclosure of mortgage by  advertisement  is
essentially  similar to foreclosure of a deed of trust by non-judicial  power of
sale.                                                                           

      Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific  provision in the deed of trust that  authorizes
the  trustee  to sell the  property  to a third  party  upon any  default by the
borrower under the terms of the note or deed of trust. In certain  states,  such
foreclosure  also may be  accomplished by judicial action in the manner provided
for by foreclosure of mortgages. In some states the trustee must record a notice
of  default  and send a copy to the  borrower-trustor  and to any person who has
recorded a request for a copy of a notice of sale. In addition, the trustee must
provide  notice in some  states to any other  individual  having an  interest of
record in the real property,  including any junior  lienholders.  If the deed of
trust is not reinstated within any applicable cure period, 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.  In addition,  some state laws require
that a copy of the  notice  of sale be posted  on the  property  and sent to all
parties having an interest in the property.                                     

      In some states, the  borrower-trustor  has the right to reinstate the loan
at any time  following  default  until  shortly  before the  trustee's  sale. In
general,  the borrower,  or any other person having a junior  encumbrance on the
real estate,  may, during a reinstatement  period cure the default by paying the
entire  amount in arrears plus the costs and expenses  incurred in enforcing the
obligation.  Certain state laws control the amount of  foreclosure  expenses and
costs, including attorneys' fees, that may be recovered by a lender.            

      In the case of foreclosure under either a mortgage or a deed of trust, the
sale by the receiver or other designated officer, or by the trustee, is a public
sale.  However,  because of the  difficulty a potential  buyer at the sale would
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings,  it is
not common for a third party to purchase the property at the  foreclosure  sale.
Rather,  the  lender  generally  purchases  the  property  from the  trustee  or
receiver.  Thereafter,  subject to the right of the  borrower  in some states to
remain in possession  during the redemption  period,  the lender will assume the
burden of  ownership,  including  obtaining  hazard  insurance  and making  such
repairs at its own expense as are necessary to render the property  suitable for
sale.  The lender  commonly will obtain the services of a real estate broker and
pay the  broker a  commission  in  connection  with  the  sale of the  property.
Depending  upon  market  conditions,  the  ultimate  proceeds of the sale of the
property may not equal the lender's investment in the property.                 

      Rights of Redemption. In some states, after the sale pursuant to a deed of
trust or foreclosure of a mortgage,  the borrower and certain  foreclosed junior
lienors are given a statutory  period in which to redeem the  property  from the
foreclosure  sale. In certain other states,  this right of redemption (i) may be
waived or (ii) applies only to sale following judicial foreclosure, and not sale
pursuant to a  non-judicial  power of sale.  In most  states  where the right of
redemption  is  available,  statutory  redemption  may occur upon payment of the
foreclosure purchase price, accrued interest and taxes. In some states the right
to redeem is an  equitable  right.  The  effect of a right of  redemption  is to

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diminish the ability of the lender to sell the foreclosed property. The exercise
of a  right  of  redemption  would  defeat  the  title  of  any  purchaser  at a
foreclosure  sale,  or of any purchaser  from the lender  subsequent to judicial
foreclosure or sale under a deed of trust. Consequently, the practical effect of
the  redemption  right is to force the lender to maintain  property  and pay the
expenses of ownership until the redemption period has run.                      

      Anti-Deficiency  Legislation  and Other  Limitations  on Lenders.  Certain
states  have  imposed  statutory  restrictions  that  limit  the  remedies  of a
beneficiary  under a deed of trust or a mortgagee under a mortgage relating to a
single family residence. In some states, statutes limit or restrict the right of
the  beneficiary  or  mortgagee  to 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 borrower equal in most cases to the
difference between the amount due to the lender and the net amount realized upon
the foreclosure sale.                                                           

      Some state  statutes may require the  beneficiary  or mortgagee to exhaust
the security  afforded  under a deed of trust or mortgage by  foreclosure  in an
attempt to satisfy the full debt before  bringing a personal  action against the
borrower.  In certain  other  states,  the  lender has the option of  bringing a
personal  action against the borrower on the debt without first  exhausting such
security;  however,  in some of these states, the lender,  following judgment on
such  personal  action,  may be  deemed  to have  elected  a  remedy  and may be
precluded from exercising  remedies with respect to the security.  Consequently,
the  practical  effect of the election  requirement,  when  applicable,  is that
lenders will usually  proceed first against the security  rather than bringing a
personal action against the borrower.                                           

      Other  statutory  provisions may limit any deficiency  judgment  against a
former  borrower  following a foreclosure  sale to the excess of the outstanding
debt over the fair market  value of the  property at the time of such sale.  The
purpose  of these  statutes  is to prevent a  beneficiary  or a  mortgagee  from
obtaining a large deficiency judgment against the former borrower as a result of
low or no bids at the foreclosure sale.                                         

      In some states,  exceptions to the  anti-deficiency  statutes are provided
for in  certain  instances  where the value of the  lender's  security  has been
impaired by acts or omissions  of the  borrower,  for  example,  in the event of
waste of the property.                                                          

      In addition to  anti-deficiency  and related  legislation,  numerous other
federal and state statutory  provisions,  including the federal bankruptcy laws,
the  federal  Soldier's  and  Sailor's  Civil  Relief Act of 1940 and state laws
affording  relief to  debtors,  may  interfere  with or affect the  ability of a
secured mortgage lender to realize upon its security.  For example, with respect
to a Land-and-Home Contract or a Mortgage Loan, in a Chapter 13 proceeding under
the federal bankruptcy code, when a court determines that the value of a home is
less than the principal balance of the loan, the court may prevent a lender from
foreclosing on the home,  and, as part of the  rehabilitation  plan,  reduce the
amount of the secured  indebtedness to the value of the home as it exists at the
time of the proceeding,  leaving the lender as a general unsecured  creditor for
the difference between that value and the amount of outstanding indebtedness.  A
bankruptcy  court  may  grant  the  debtor a  reasonable  time to cure a payment
default,  and in the  case  of a  mortgage  loan  not  secured  by the  debtor's
principal  residence,  also may  reduce  the  monthly  payments  due under  such
mortgage loan, change the rate of interest and alter the mortgage loan repayment
schedule.  Certain court decisions have applied such relief to claims secured by
the debtor's principal residence.                                               

      The Code  provides  priority  to  certain  tax liens  over the lien of the
mortgage  or the deed of trust.  The laws of some  states  provide  priority  to
certain tax liens over the lien of the  mortgage or the deed of trust.  Numerous
federal and state consumer protection laws impose substantive  requirements upon
mortgage  lenders  in  connection  with  the  origination,   servicing  and  the
enforcement of mortgage  loans.  These laws include the federal Truth in Lending
Act, Real Estate Settlement  Procedures Act, Equal Credit  Opportunity Act, Fair
Credit  Billing  Act,  Fair  Credit  Reporting  Act,  the Fair  Debt  Collection
Practices Act and related statutes and regulations. These federal laws and state
laws impose specific statutory liabilities upon lenders who originate or service
mortgage  loans and who fail to comply with the  provisions  of the law. In some
cases, this liability may affect assignees of the Contracts.                    

Certain Matters Relating to Insolvency                                          

      The Company  intends that each  transfer of the  Contracts to a Trust Fund
will  constitute  a  sale  rather  than a  pledge  of the  Contracts  to  secure
indebtedness of the Company.  However, if the Company (or one of its affiliates)
were to become a debtor under the federal bankruptcy code, it is possible that a
creditor, receiver,  conservator or trustee in bankruptcy of the Company (or one
of its affiliates) or the Company as a  debtor-in-possession  may argue         

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the sale of the Contracts by the Company (or one of its affiliates) was a pledge
of the Contracts  rather than a sale. This position,  if argued or accepted by a
court,  could  result in a delay or reduction  of  distributions  to the related
Certificateholders.                                                             

Consumer Protection Laws                                                        

      The so-called  "Holder-in-Due-Course" rule of the Federal Trade Commission
is  intended  to defeat the  ability  of the  transferor  of a  consumer  credit
contract  which is the seller of goods which gave rise to the  transaction  (and
certain  related lenders and assignees) to transfer such contract free of notice
of claims by the debtor  thereunder.  The effect of this rule is to subject  the
assignee of such a Contract  (such as the Trust Fund) to all claims and defenses
which the Obligor  could  assert  against the seller of the  Manufactured  Home.
Liability under this rule is limited to amounts paid under a Contract;  however,
the Obligor also may be able to assert the rule to set off remaining amounts due
as a defense  against a claim  brought by the Trust Fund  against  the  Obligor.
Numerous other federal and state consumer  protection  laws impose  requirements
applicable to the origination and lending  pursuant to the Contracts,  including
the Truth in Lending  Act,  the Federal  Trade  Commission  Act, the Fair Credit
Billing Act, the Fair Credit  Reporting Act, the Equal Credit  Opportunity  Act,
the Fair Debt Collection  Practices Act and the Uniform Consumer Credit Code. In
the case of some of these laws, the failure to comply with their  provisions may
affect the enforceability of the related Contract.                              

Transfers of Manufactured Homes; Enforceability of "Due-on-Sale" Clauses        

      The  Contracts,  in general,  prohibit the sale or transfer of the related
Manufactured  Homes or Modular  Homes  without the consent of the  Servicer  and
permit the  acceleration  of the maturity of the  Contracts by the Servicer upon
any such sale or transfer that is not consented to. The Servicer expects that it
will  permit  most  transfers  and not  accelerate  the  maturity of the related
Contracts. In certain cases, the transfer may be made by a delinquent Obligor in
order to avoid a repossession, foreclosure proceeding or trustee's sale.        

      In the case of a transfer  of a  Manufactured  Home or Modular  Home after
which the Servicer  desires to accelerate the maturity of the related  Contract,
the Servicer's  ability to do so will depend on the  enforceability  under state
law of the "due-on-sale"  clause. The Garn-St.  Germain Depository  Institutions
Act of 1982 preempts,  subject to certain exceptions and conditions,  state laws
prohibiting  enforcement of "due-on-sale" clauses applicable to the Manufactured
Homes or  Modular  Homes.  Consequently,  in some  states  the  Servicer  may be
prohibited  from  enforcing  a  "due-on-sale"   clause  in  respect  of  certain
Manufactured Homes or Modular Homes.                                            

Applicability of Usury Laws                                                     

      Title V of the Depository  Institutions  Deregulation and Monetary Control
Act of 1980, as amended  ("Title V"),  provides  that,  subject to the following
conditions, state usury limitations shall not apply to any loan which is secured
by a  first  lien  on  certain  kinds  of  manufactured  housing  and  mortgaged
properties.  The Contracts would be covered if they satisfy certain  conditions,
among other  things,  governing the terms of any  prepayments,  late charges and
deferral  fees and requiring a 30-day  notice  period prior to  instituting  any
action leading to  repossession  of or  foreclosure  with respect to the related
unit.                                                                           

      Title V authorized any state to reimpose limitations on interest rates and
finance  charges  by  adopting  before  April  1,  1983 a law or  constitutional
provision which expressly rejects application of the federal law. Fifteen states
adopted such a law prior to the April 1, 1983 deadline. In addition,  even where
the  Title V was not so  rejected,  any  state is  authorized  by law to adopt a
provision limiting discount points or other charges on loans covered by Title V.
The Company will represent in the applicable Agreement that all of the Contracts
comply with applicable usury laws.                                              

ERISA CONSIDERATIONS

      The Employee  Retirement Income Security Act of 1974, as amended ("ERISA")
imposes  certain  requirements  on  employee  benefit  plans  subject  to  ERISA
("Plans")  and on  persons  who are  fiduciaries  with  respect  to such  Plans.
Generally,  ERISA  applies  to  investments  made by  such  Plans.  Among  other
requirements,  ERISA mandates that the assets of Plans be held in trust and that
the trustee,  or other duly authorized  fiduciary,  have exclusive authority and
discretion  to manage and control the assets of such Plans.  ERISA also  imposes
certain  duties on  persons  who                                                

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are fiduciaries of such Plans. Under ERISA (subject to certain exceptions),  any
person who exercises any authority or control with respect to the  management or
disposition  of the assets of a Plan is  considered  to be a  fiduciary  of such
Plan, subject to the standards of fiduciary conduct under ERISA. These standards
include the  requirements  that the assets of Plans be invested  and managed for
the exclusive benefit of Plan participants and beneficiaries, a determination by
the Plan  fiduciary  that any such  investment is permitted  under the governing
Plan  instruments  and is prudent  and  appropriate  for the Plan in view of its
overall  investment  policy  and  the  composition  and  diversification  of its
portfolio.  Certain  employee  benefit  plans,  such as  governmental  plans (as
defined in ERISA  Section  3(32)) and church plans (as defined in ERISA  Section
3(33)),  are not  subject  to ERISA.  Accordingly,  assets of such  plans may be
invested in Certificates  without regard to the ERISA  considerations  described
above and below,  subject to the  provisions of  applicable  state law. Any such
plan which is  qualified  and exempt from  taxation  under  Sections  401(a) and
501(a) of the Internal  Revenue Code of 1986, as amended (the "Code"),  however,
is subject to the prohibited  transaction  rules set forth in Section 503 of the
Code.                                                                           

      Any Plan  fiduciary  considering  the  purchase  of a  Certificate  should
consult with its counsel with respect to the  potential  applicability  of ERISA
and the Code to such investment.  Moreover, each Plan fiduciary should determine
whether,  under the general  fiduciary  standards  of  investment  prudence  and
diversification,  an investment in the Certificates is appropriate for the Plan,
taking into account the overall investment policy of the Plan and composition of
the Plan's investment portfolio.                                                

      In addition to the imposition of general fiduciary standards of investment
prudence and  diversification  under ERISA,  other  provisions of ERISA, and the
corresponding  provisions  of the Code,  prohibit a broad range of  transactions
involving  assets of Plans (including for these purposes  individual  retirement
accounts and keough plans) and persons having certain specified relationships to
a Plan  ("parties  in  interest"  within the meaning of ERISA and  "disqualified
persons"  within the  meaning of the Code).  Such  transactions  are  treated as
"prohibited  transactions"  under Sections 406 and 407 of ERISA and excise taxes
are imposed upon such persons by Section 4975 of the Code.  An investment in the
Certificates  by a Plan might  constitute  a  prohibited  transaction  under the
foregoing provisions unless an administrative exemption applies. In addition, if
any investing  Plan's assets were deemed to include an interest in the assets of
the Contract Pool and not merely an interest in the  Certificates,  transactions
occurring  in the  operation of the Contract  Pool might  constitute  prohibited
transactions unless an administrative exemption applies. Certain such exemptions
which may be applicable to the acquisition and holding of the Certificates or to
the servicing and operation of the Contract Pool are noted below.               

      The Department of Labor ("DOL") has issued a regulation (29 C.F.R. Section
2510.3-101) (the "Regulation") concerning the definition of what constitutes the
assets  of a  Plan.  The  Regulation  provides  that,  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 purposes of ERISA to be assets of the investing  plan unless  certain
exceptions apply. However, the Regulation provides that,  generally,  the assets
of a corporation  or  partnership in which a Plan invests will not be deemed for
purposes of ERISA to be assets of such Plan if the equity  interest  acquired by
the investing Plan is a publicly-offered  security. A publicly-offered security,
as defined  under the  Regulation,  is a security  that is widely  held,  freely
transferable,  and either is (i) part of a class of securities  registered under
Section 12(b) or 12(g) of the  Securities  Exchange Act of 1934, or (ii) sold to
the Plan as part of a securities offering to the public pursuant to an effective
registration  statement  under  the  Securities  Act of 1933,  and the  class of
securities of which such security is a part is registered  under the  Securities
Exchange  Act of 1934  within  120 days (or such later time as may be allowed by
the Securities and Exchange  Commission) after the end of the fiscal year of the
issuer during which the offering of such securities to the public occurred.  The
Certificates are not expected to be publicly-offered  securities under the terms
of the Regulation,  and it is not anticipated  that any other exemption from the
Regulation will apply.                                                          

      As a result,  an investing Plan's assets could be considered to include an
undivided  interest in the  Contracts  and any other assets held in the Contract
Pool.  In the event that assets of a Contract Pool are  considered  assets of an
investing  Plan,  the Company,  the Servicer,  the Trustee,  other  persons,  in
providing services with respect to the Contracts or certain affiliates  thereof,
may be considered,  or might become, parties in interest or disqualified persons
with respect to a Plan. If so, the  acquisition or holding of Certificates by or
on  behalf  of such  Plan  could  be  considered  to give  rise to a  prohibited
transaction  within  the  meaning  of  ERISA  and the Code  unless a  statutory,
regulatory or administrative exemption applies.                                 

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      Special caution should be exercised before the assets of a Plan (including
assets that may be held in an insurance  company's  separate or general accounts
where  assets in such  accounts  may be deemed to be Plan assets for purposes of
ERISA) are used to purchase a Certificate  if, with respect to such assets,  the
Company,  the Servicer,  the Trustee,  the Underwriters  named in the Prospectus
Supplement or an affiliate  thereof either:  (a) has investment  discretion with
respect to the  investment  of such assets of such Plan or (b) has  authority or
responsibility  to give, or regularly gives,  investment  advice with respect to
such assets for a fee and pursuant to an agreement  or  understanding  that such
advice will serve as a primary basis for  investment  decisions  with respect to
such  assets and that such  advice  will be based on the  particular  investment
needs of the Plan.                                                              

      The U.S.  Department of Labor has granted to the lead Underwriter named in
the  Prospectus  Supplement an exemption (the  "Exemption")  from certain of the
prohibited  transaction rules of ERISA with respect to the initial purchase, the
holding  and  the  subsequent  resale  by  Plans  of  certificates  representing
interests  in   asset-backed   pass-through   trusts  that  consist  of  certain
receivables,   loans  and  other   obligations  that  meet  the  conditions  and
requirements of the Exemption.  The receivables covered by the Exemption include
manufactured housing installment sales contracts and installment loan agreements
such as the Contracts. The Exemption will apply to the acquisition,  holding and
resale of the Senior  Certificates by a Plan,  provided that certain  conditions
(certain of which are described below) are met.                                 

      Among the conditions which must be satisfied for the Exemption to apply to
the Senior Certificates are the following:                                      

           (1) The acquisition of the Senior  Certificates by a Plan is on terms
      (including  the price for the  Senior  Certificates)  that are at least as
      favorable to the Plan as they would be in an arm's length transaction with
an unrelated party;                                                 

           (2) The rights and  interests  evidenced  by the Senior  Certificates
      acquired  by the Plan are not  subordinated  to the rights  and  interests
evidenced by other certificates of the Trust Fund;                  

           (3) The  Senior  Certificates  acquired  by the Plan have  received a
      rating at the time of such acquisition that is in one of the three highest
      generic rating categories from either Standard & Poor's, a Division of The
      McGraw-Hill Companies, Moody's Investors Service, Inc., Duff & Phelps Inc.
or Fitch IBCA, Inc.;                                                

           (4)   The  Trustee  is  not  an affiliate of any other member of  the
Restricted Group (as defined below);                                

           (5) The sum of all payments  made to the  Underwriter  in  connection
      with the distribution of the Senior Certificates  represents not more than
      reasonable compensation for underwriting the Senior Certificates;  the sum
      of all payments  made to and retained by the Company  pursuant to the sale
      of the  Contracts  to the  Trust  Fund  represents  not more than the fair
      market value of such  Contracts;  and the sum of all payments  made to and
      retained by the Servicer represents not more than reasonable  compensation
      for the Servicer's  services under the Agreement and  reimbursement of the
Servicer's reasonable expenses in connection therewith; and         

            (6) The Plan investing in the Senior  Certificates is an "accredited
      investor" as defined in Rule 501 (a)(1) of Regulation D of the  Securities
and Exchange Commission under the Securities Act of 1933.           

      Moreover,    the   Exemption    would   provide    relief   from   certain
self-dealing/conflict  of interest  prohibited  transactions that may occur if a
Plan  fiduciary  causes a Plan to acquire  interests  in a trust  that  includes
obligations  on which the  fiduciary (or an affiliate) is obligor only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance,  at least fifty (50) percent of the Senior
Certificates  are acquired by persons  independent of the  Restricted  Group (as
defined below) and at least fifty (50) percent of the aggregate  interest in the
Trust Fund is acquired by persons  independent of the Restricted Group, (ii) the
Plan's  investment  in Senior  Certificates  does not  exceed  twenty-five  (25)
percent  of  all of the  Senior  Certificates  outstanding  at the  time  of the
acquisition,   and  (iii)  immediately  after  the  acquisition,  no  more  than
twenty-five  (25)  percent of the assets of any Plan with  respect to which such
person is a fiduciary are invested in  certificates  representing an interest in
one or more trusts  containing  assets sold or serviced by the same entity.  The
Exemption does not apply to Plans sponsored by the Company, any Underwriter, the
Trustee,  the  Servicer,  any obligor with respect to Contracts  included in the
Trust Fund  constituting  more than five  percent of the  aggregate  unamortized
principal  balance of the assets in the Trust  Fund,  or any  affiliate  of such
parties (the "Restricted Group").                                               

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      Employee benefit plans that are governmental  plans (as defined in section
3(32) of ERISA) and church plans (as defined in section  3(33) of ERISA) are not
subject to ERISA  requirements.  Accordingly,  unless otherwise specified in the
Prospectus  Supplement,  assets of such  plans  may be  invested  in the  Senior
Certificates  without regard to the ERISA restrictions  described above, subject
to applicable provisions of other federal and state laws.                       

      Any  Plan  fiduciary  who  proposes  to  cause a Plan to  purchase  Senior
Certificates  should  consult with its own counsel with respect to the potential
consequences under ERISA and the Code of the Plan's acquisition and ownership of
Senior  Certificates.  Assets of a Plan or individual  retirement account should
not be invested in the Senior Certificates unless it is clear that the assets of
the Trust Fund will not be plan assets or unless it is clear that the  Exemption
or a prohibited  transaction class exemption will apply and exempt all potential
prohibited transactions.                                                        

Subordinated Certificates                                                       

      Because  the  Subordinated  Certificates  are  subordinated  to the Senior
Certificates,  the  Exemption  will not apply to the  acquisition,  holding  and
resale of the Subordinated Certificates by a Plan.                              

      Consequently, no transfer of a Subordinate Certificate shall be registered
unless the prospective  transferee provides the Trustee and the Company with (a)
a  certification  to the effect that (1) such  transferee is neither an employee
benefit  plan  subject to section 406 or section 407 of ERISA or to section 4975
of the Code; the trustee of any such plan; a person acting on behalf of any such
plan; nor a person using the assets of any such plan; or (2) if such  transferee
is an insurance company, it is purchasing such certificates with funds contained
in an "insurance  company  general  account" (as such term is defined in section
V(e) of the Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and the
purchase and holding of such  certificates  are covered under Sections I and III
of  PTCE  95-60;  or (b) an  opinion  of  counsel  (a  "benefit  plan  opinion")
satisfactory to the Trustee and the Company,  and upon which the Trustee and the
Company  shall be entitled to rely,  to the effect that the purchase and holding
of such Subordinate Certificate by the prospective transferee will not result in
the assets of the Trust Fund being  deemed to be plan  assets and subject to the
prohibited  transaction provisions of ERISA or the Code and will not subject the
Trustee or the Company to any obligation in addition to those undertaken by such
entities in the  agreement,  which opinion of counsel shall not be an expense of
the Trustee or the Company.  Unless such  certification or opinion is delivered,
Certificate  Owners of the Subordinate  Certificates  will be deemed to make the
representations in clause (a)(1).                                               

 CERTAIN FEDERAL INCOME TAX CONSEQUENCES

General                                                                         

      The  following  is a general  discussion  of  certain  federal  income tax
consequences  relating  to  the  purchase,  ownership,  and  disposition  of the
Certificates  and is based on advice of Brown & Wood LLP, special tax counsel to
the Company. The discussion is also based upon laws,  regulations,  rulings, and
decisions now in effect,  including Treasury  Regulations issued on December 23,
1992, and generally  effective for REMICs with startup days on or after November
12,  1991  (the  "REMIC  Regulations"),  all of which are  subject  to change or
possibly differing interpretations.  The discussion below addresses all material
federal income tax consequences generally applicable to investors.  However, the
discussion  does not  purport  to deal  with  federal  income  tax  consequences
applicable  to all  categories  of  investors,  some of which may be  subject to
special rules.  Investors should consult their own tax advisors to determine the
federal,  state,  local,  and  any  other  tax  consequences  of  the  purchase,
ownership, and disposition of the Certificates.                                 

      Many aspects of the federal tax treatment of the purchase,  ownership, and
disposition of the Certificates  will depend upon whether an election is made to
treat the Trust Fund or a segregated  portion thereof  evidenced by a particular
series or  sub-series of  Certificates  as a REMIC within the meaning of Section
860D(a) of the Code.  The  Prospectus  Supplement  for each series will indicate
whether  or not an  election  to be  treated as a REMIC has been or will be made
with respect  thereto.  The  following  discussion  deals first with Series with
respect to which a REMIC  Election is made and then with Series with  respect to
which a REMIC Election is not made.                                             

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REMIC Series                                                                    

      With respect to each Series of Certificates  for which a REMIC Election is
made,  Brown & Wood LLP,  special tax counsel to the Company,  will have advised
the Company  that in its opinion,  assuming  (i) the making of that  election in
accordance with the  requirements  of the Code and (ii) ongoing  compliance with
the applicable  Agreement,  at the initial  issuance of the Certificates in such
series the Trust Fund will  qualify  as a REMIC and the  Certificates  in such a
Series ("REMIC Certificates") will be treated either as regular interests in the
REMIC  within  the  meaning  of  Section   860G(a)(1)  of  the  Code   ("Regular
Certificates")  or as a residual  interest  in the REMIC  within the  meaning of
Section 860G(a)(2) of the Code ("Residual Certificates").                       

      Qualification  as a  REMIC.  Qualification  as a  REMIC  involves  ongoing
compliance with certain  requirements and the following  discussion assumes that
such  requirements  will be satisfied by the Trust Fund so long as there are any
REMIC  Certificates  outstanding.  Substantially  all of the assets of the REMIC
must consist of "qualified  mortgages"  and  "permitted  investments"  as of the
close of the third month  beginning  after the day on which the REMIC issues all
of its regular  and  residual  interests  (the  "Startup  Day") and at all times
thereafter.  The term  "qualified  mortgage"  means any obligation  (including a
participation or certificate of beneficial  ownership in such obligation)  which
is  principally  secured by an interest in real property that is  transferred to
the REMIC on the Startup Day in exchange  for regular or residual  interests  in
the REMIC or is purchased by the REMIC within the three-month  period  beginning
on the  Startup Day if such  purchase  is pursuant to a fixed price  contract in
effect on the Startup  Day.  The REMIC  Regulations  provide  that a Contract is
principally  secured by an interest in real property if the fair market value of
the real  property  securing the Contract is at least equal to either (i) 80% of
the issue price (generally,  the principal  balance) of the Contract at the time
it was originated or (ii) 80% of the adjusted issue price (the  then-outstanding
principal balance,  with certain  adjustments) of the Contract at the time it is
contributed to a REMIC. The fair market value of the underlying real property is
to be  determined  after taking into account other liens  encumbering  that real
property.  Alternatively,  a Contract is  principally  secured by an interest in
real property if substantially  all of the proceeds of the Contract were used to
acquire  or to improve or protect an  interest  in real  property  that,  at the
origination date, is the only security for the Contract (other than the personal
liability  of the  obligor).  The REMIC  Regulations  provide  that  obligations
secured by  manufactured  housing or mobile  homes (not  including  recreational
vehicles,  campers or similar  vehicles)  which are "single  family  residences"
under Section 25(e)(10) of the Code will qualify as obligations  secured by real
property without regard to state law  classifications.  See the discussion below
under "REMIC Series -- Status of  Manufactured  Housing  Contracts." A qualified
mortgage also includes a qualified  replacement mortgage that is used to replace
any  qualified  mortgage  within three months of the Startup Day or to replace a
defective mortgage within two years of the Startup Day.                         

      "Permitted  investments"  consist  of (a)  temporary  investments  of cash
received under qualified  mortgages before  distribution to holders of interests
in the REMIC ("cash-flow investments"),  (b) amounts, such as a Reserve Fund, if
any,  reasonably  required to provide for full payment of expenses of the REMIC,
the principal and interest due on regular or residual  interests in the event of
defaults  on  qualified  mortgages,  lower than  expected  returns on  cash-flow
investments,  prepayment  interest  shortfalls  or certain  other  contingencies
("qualified  reserve assets"),  and (c) certain property acquired as a result of
foreclosure of defaulted qualified mortgages ("foreclosure property"). A reserve
fund will not be  qualified if more than 30% of the gross income from the assets
in the reserve  fund is derived from the sale or other  disposition  of property
held for  three  months or less,  unless  such sale is  necessary  to  prevent a
default  in  payment of  principal  or  interest  on  Regular  Certificates.  In
accordance with Section 860G(a)(7) of the Code, a reserve fund must be "promptly
and  appropriately"  reduced as payments on contracts are received.  Foreclosure
property will be a permitted investment only to the extent that such property is
not held for more than three years  following  the close of the taxable  year in
which the property was acquired by the REMIC.                                   

      The Code  requires that in order to qualify as a REMIC an entity must make
reasonable  arrangements  designed to ensure that  certain  specified  entities,
generally including governmental entities or other entities that are exempt from
United States tax, including the tax on unrelated business income ("Disqualified
Organizations"), do not hold residual interest in the REMIC. Consequently, it is
expected  that in the case of any Trust Fund for which a REMIC  Election is made
the  transfer,  sale,  or  other  disposition  of a  Residual  Certificate  to a
Disqualified  Organization  will be  prohibited  and the  ability  of a Residual
Certificate to be transferred will be conditioned on the Trustee's  receipt of a
certificate or other document representing that the proposed transferee is not a
Disqualified Organization. The transferor of a Residual Certificate must not, as
of the time of the transfer,  have actual knowledge that such                   

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representation is false. The Code further requires that reasonable  arrangements
must be made to enable a REMIC to provide  the  Internal  Revenue  Service  (the
"Service")  and  certain  other  parties,   including  transferors  of  residual
interests in a REMIC, with the information  needed to compute the tax imposed by
Section  860E(e)(1)  of the Code if,  in spite  of the  steps  taken to  prevent
Disqualified Organizations from holding residual interests, such an organization
does, in fact, acquire a residual interest. See "REMIC Series -- Restrictions on
Transfer of Residual Certificates" below.                                       

      If the  Trust  Fund  fails  to  comply  with  one or more  of the  ongoing
requirements for qualification as a REMIC, the Trust Fund will not be treated as
REMIC for the year during which such failure occurs and for all years thereafter
unless  the  Service  determines,  in its  discretion,  that  such  failure  was
inadvertent  (in which case,  the Service may require any  adjustments  which it
deems  appropriate).  If the ownership interests in the assets of the Trust Fund
consist  of  multiple  classes,  failure  to treat the Trust Fund as a REMIC may
cause the Trust Fund to be treated as an  association  taxable as a corporation.
Such  treatment  could  result  in income of the Trust  Fund  being  subject  to
corporate  tax in the hands of the  Trust  Fund and in a  reduced  amount  being
available for distribution to  Certificateholders  as a result of the payment of
such taxes.                                                                     

      Status of Manufactured Housing Contracts. The REMIC Regulations as well as
a Notice issued by the Service provide that obligations  secured by interests in
manufactured  housing,  which qualify as "single family  residences"  within the
meaning  of Section  25(e)(10)  of the Code,  are to be  treated  as  "qualified
mortgages"  for a REMIC.  Under Section  25(e)(10) of the Code, the term "single
family  residence"  includes  any  manufactured  home which has a minimum of 400
square  feet of living  space and a minimum  width in excess of 102  inches  and
which  is of a kind  customarily  used at a fixed  location.  The  Company  will
represent and warrant that each of the manufactured homes securing the Contracts
which are a part of a Trust  Fund  meets  this  definition  of a "single  family
residence." See the discussion  above under "REMIC Series --  Qualification as a
REMIC."                                                                         

      Tiered REMIC Structures.  For certain series of Certificates,  two or more
separate  elections may be made to treat segregated  portions of the assets of a
single Trust Fund as REMICs for federal income tax purposes  (respectively,  the
"Subsidiary  REMIC" or  "Subsidiary  REMICs" and the "Master  REMIC").  Upon the
issuance  of any such  series of  Certificates,  Brown & Wood LLP,  special  tax
counsel to the Company,  will have advised the Company, as described above, that
at the initial issuance of the Certificates,  the Subsidiary REMIC or Subsidiary
REMICs and the Master REMIC will each qualify as a REMIC for federal  income tax
purposes,  and that the  Certificates  in such series will be treated  either as
Regular  Certificates or Residual  Certificates of the appropriate  REMIC.  Only
REMIC Certificates issued by the Master REMIC will be offered hereunder.  Solely
for the purpose of determining whether such Regular Certificates will constitute
qualifying  real  estate or real  property  assets  for  certain  categories  of
financial institutions or real estate investment trusts as described below, each
REMIC in a tiered REMIC  structure  will be treated as one.  See the  discussion
below under "REMIC Series -- Taxation of Regular Interests."                    

      Taxation of Regular Interests. Regular Certificates will be treated as new
debt  instruments  issued  by  the  REMIC  on  the  Startup  Day.  If a  Regular
Certificate  represents  an  interest  in a REMIC that  consists  of a specified
portion of the interest payments on the REMIC's qualified mortgages,  the stated
principal  amount with respect to that Regular  Certificate  may be zero. Such a
specified  portion  may  consist  of a fixed  number  of basis  points,  a fixed
percentage  of  interest  or a  qualified  variable  rate  on some or all of the
qualified mortgages. Stated interest on a Regular Certificate will be taxable as
ordinary  income.  Holders of Regular  Certificates  that would otherwise report
income under a cash method of accounting  will be required to report income with
respect to such Regular  Certificates under the accrual method.  Under Temporary
Treasury Regulations, if a Trust Fund, with respect to which a REMIC Election is
made,  is  considered  to be a  "single-class  REMIC," a portion of the  REMIC's
servicing  fees,  administrative  and  other  non-interest  expenses,  including
assumption  fees and late  payment  charges  retained  by the  Company,  will be
allocated  as a  separate  item to  those  Regular  Certificateholders  that are
"pass-through interest holders." Generally, a single-class REMIC is defined as a
REMIC that would be treated as a fixed investment trust under applicable law but
for its qualification as a REMIC, or a REMIC that is substantially similar to an
investment  trust but is structured with the principal  purpose of avoiding this
allocation requirement imposed by the Temporary Treasury Regulations. Generally,
a  pass-through  interest  holder  refers  to  individuals,  entities  taxed  as
individuals,  such as  certain  trusts and  estates,  and  regulated  investment
companies. An individual, an estate, or a trust that holds a Regular Certificate
in such a REMIC will be allowed to deduct the foregoing  expenses  under Section
212 of the Code only to the extent that,  in the  aggregate  and  combined  with
certain other itemized                                                          

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deductions,  they  exceed 2% of the  adjusted  gross  income of the  holder.  In
addition, Section 68 of the Code provides that the amount of itemized deductions
(including  those provided for in Section 212 of the Code)  otherwise  allowable
for the taxable year for an individual  whose  adjusted  gross income  exceeds a
threshold  amount  specified in the Code will be reduced by the lesser of (i) 3%
of the excess of adjusted  gross income over the specified  threshold  amount or
(ii) 80% of the amount of  itemized  deductions  otherwise  allowable,  for such
taxable  year.  As a result of the  foregoing  limitations,  certain  holders of
Regular Certificates in "single-class  REMICs" may not be entitled to deduct all
or any part of the foregoing expenses.                                          

      Tax Status of REMIC  Certificates.  In general,  (i) Regular  Certificates
held by a thrift institution taxed as a "domestic building and loan association"
within the meaning of Section 7701(a)(19) of the Code will constitute "a regular
 . . . interest in a REMIC" within the meaning of Section  7701(a)(19)(C)(xi) of
the Code; and (ii) Regular  Certificates  held by a real estate investment trust
will constitute "real estate assets" within the meaning of Section  856(c)(5)(B)
of the Code and interest  thereon will be  considered  "interest on  obligations
secured  by  mortgages  on  real   property"   within  the  meaning  of  Section
856(c)(3)(B) of the Code, in each such case as long as the portion of the assets
of the Trust Fund qualifying for the corresponding status is at least 95% of the
assets of the  REMIC.  If less  than 95% of the  average  adjusted  basis of the
assets  comprising  the REMIC are assets  qualifying  under any of the foregoing
Sections of the Code (including  assets described in Section  7701(a)(19)(C)  of
the Code),  then the Regular  Certificates will be qualifying assets only to the
extent that the assets  comprising  the REMIC are  qualifying  assets.  Treasury
Regulations  promulgated  pursuant to Section 593 of the Code define "qualifying
real  property  loans"  to  include  a  loan  secured  by  a  mobile  home  unit
"permanently  fixed to real property"  except during a brief period in which the
unit is transported to its site. Section  7701(a)(19)(C)(v) of the Code provides
that "loans secured by an interest in real  property"  includes loans secured by
mobile homes not used on a transient  basis.  Treasury  Regulations  promulgated
pursuant  to Section  856 of the Code state that local law  definitions  are not
controlling in determining  the meaning of the term "Real Property" for purposes
of that  section,  and  the  Service  has  ruled  that  obligations  secured  by
permanently  installed  mobile home units qualify as "real estate  assets" under
this provision.  Entities affected by the foregoing  provisions of the Code that
are  considering  the  purchase of  Certificates  should  consult  their own tax
advisors regarding these provisions.  Furthermore, interest paid with respect to
Certificates held by a real estate investment trust will be considered "interest
on  obligations  secured by  mortgages  on real  property or on interest in real
property"  within the  meaning of Section  856(c)(3)(B)  of the Code to the same
extent that the  Certificates  themselves  are  treated as real  estate  assets.
Regular  Certificates  held by a regulated  investment  company or a real estate
investment trust will not constitute "Government  securities" within the meaning
of Sections  851(b)(3)(A)(i)  and  856(c)(4)(A)  of the Code,  respectively.  In
addition,  the REMIC Regulations  provide that payments on Contracts  qualifying
for the corresponding  status that are held and reinvested pending  distribution
to  Certificateholders  will be considered to be "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code.                                    

      Original Issue Discount. Regular Certificates may be issued with "original
issue  discount."  Rules  governing  original  issue  discount  are set forth in
Sections  1271-1273  and 1275 of the Code and the  Treasury  Regulations  issued
thereunder  in  January  1994 and in June  1996  (the  "OID  Regulations").  The
discussion herein is based in part on the OID Regulations, which generally apply
to debt instruments issued on or after April 4, 1994, but which generally may be
relied upon for debt  instruments  issued after December 21, 1992. The June 1996
Regulations  apply to debt instruments  issued after August 13, 1996.  Moreover,
although the rules  relating to original  issue  discount  contained in the Code
were  modified  by the Tax Reform Act of 1986  specifically  to address  the tax
treatment of securities, such as the Regular Certificates, on which principal is
required  to  be  prepaid  based  on  prepayments  of  the  underlying   assets,
regulations    under   that   legislation   have   not   yet   been   finalized.
Certificateholders  also should be aware that the OID Regulations do not address
certain  issues   relevant  to  prepayable   securities   such  as  the  Regular
Certificates.                                                                   

      In general, in the hands of the original holder of a Regular  Certificate,
original  issue  discount,  if  any,  is  the  difference  between  the  "stated
redemption price at maturity" of the Regular  Certificate and its "issue price."
The  original  issue  discount  with  respect to a Regular  Certificate  will be
considered  to be zero if it is less  than  0.25% of the  Regular  Certificate's
stated  redemption price at maturity  multiplied by the number of complete years
from the date of issue of such Regular Certificate to its maturity date. The OID
Regulations,  however, provide a special de minimis rule to apply to obligations
such as the Regular  Certificates  that have more than one principal  payment or
that have interest payments that are not qualified stated interest as defined in
the OID Regulations, payable before maturity ("installment obligations").  Under
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generally considered to be zero if it is less than 0.25% of the principal amount
of the obligation  multiplied by the weighted average maturity of the obligation
as defined in the OID Regulations. Because of the possibility of prepayments, it
is not clear  whether  or how the de minimis  rules  will  apply to the  Regular
Certificates. It is possible that the anticipated rate of prepayments assumed in
pricing the debt instrument (the "Prepayment Assumption") will be required to be
used in determining the weighted average  maturity of the Regular  Certificates.
In the absence of authority to the contrary, the Company expects to apply the de
minimis rule  applicable  to  installment  obligations  by using the  Prepayment
Assumption.  The OID  Regulations  provide a further  special  de  minimis  rule
applicable to any Regular  Certificates  that are  "self-amortizing  installment
obligations,"  i.e.,  Regular  Certificates  that  provide  for  equal  payments
composed of principal and qualified stated interest payable  unconditionally  at
least annually  during its entire term, with no significant  additional  payment
required at maturity.  Under this special  rule,  original  issue  discount on a
self-amortizing  installment obligation is generally considered to be zero if it
is less than 0.167% of the principal amount of the obligation  multiplied by the
number of complete years from the date of issue of such a Regular Certificate to
its maturity date.                                                              

      Generally, the original holder of a Regular Certificate that includes a de
minimis  amount of original  issue  discount  includes that de minimis  original
issue discount in income as principal  payments are made. The amount included in
income with respect to each  principal  payment equals a pro rata portion of the
entire amount of de minimis original issue discount with respect to that Regular
Certificate. Any de minimis amount of original issue discount included in income
by a holder of a Regular  Certificate is generally  treated as a capital gain if
the Regular  Certificate is a capital asset in the hands of the holder  thereof.
Pursuant to the OID Regulations, a holder of a Regular Certificate that uses the
accrual  method of tax  accounting  may elect to  include  in gross  income  all
interest  that  accrues  on a  Regular  Certificate,  including  any de  minimis
original issue discount and market discount,  by using the constant yield method
described below with respect to original issue discount.                        

      The stated redemption price at maturity of a Regular Certificate generally
will be equal to the sum of all payments,  whether  denominated  as principal or
interest,  to  be  made  with  respect  thereto  other  than  "qualified  stated
interest." Pursuant to the OID Regulations,  qualified stated interest generally
means stated  interest that is  unconditionally  payable at least  annually at a
single fixed rate of interest (or, under certain circumstances,  a variable rate
tied to an objective  index)  during the entire term of the Regular  Certificate
(including  short  periods).  It is possible  that the IRS could assert that the
stated rate of interest on the  Certificates is not  unconditionally  payable or
otherwise  does not qualify as qualified  stated  interest.  Such  position,  if
successful,  would require all holders of  Certificates  to accrue all income on
the Certificates  under the OID Regulations.  The Company,  however,  intends to
treat all stated  interest on the  Certificates  as qualified  stated  interest.
Under the OID Regulations,  certain  variable  interest rates payable on Regular
Certificates, including rates based upon the weighted average interest rate of a
Pool of  Contracts,  may not be treated as qualified  stated  interest.  In such
case,  the OID  Regulations  would treat interest under such rates as contingent
interest   which   generally   must  be   included  in  income  by  the  Regular
Certificateholder  when  the  interest  becomes  fixed,  as  opposed  to when it
accrues.  Until  further  guidance is issued  concerning  the  treatment of such
interest payable on Regular Certificates,  the REMIC will treat such interest as
being  payable at a  variable  rate tied to a single  objective  index of market
rates.  Prospective  investors  should consult their tax advisors  regarding the
treatment  of  such  interest  under  the OID  Regulations.  In the  absence  of
authority to the contrary and if otherwise  appropriate,  the Company expects to
determine the stated  redemption  price at maturity of a Regular  Certificate by
assuming that the anticipated rate of prepayment for all Contracts will occur in
such a manner  that the  initial  Remittance  Rate  for a  Certificate  will not
change.  Accordingly,  interest at the initial  Remittance  Rate will constitute
qualified  stated interest  payments for purposes of applying the original issue
discount  provisions  of the Code.  In  general,  the  issue  price of a Regular
Certificate  is the first  price at which a  substantial  amount of the  Regular
Certificates  of such  class are sold for money to the  public  (excluding  bond
houses,  brokers or similar persons or  organizations  acting in the capacity of
underwriters,  placement  agents or  wholesalers).  If a portion of the  initial
offering  price of a Regular  Certificate  is  allocable  to  interest  that has
accrued  prior  to its  date  of  issue,  the  issue  price  of  such a  Regular
Certificate includes that pre-issuance accrued interest.                        

      If the Regular  Certificates  are  determined  to be issued with  original
issue discount,  a holder of a Regular  Certificate  must generally  include the
original issue discount in ordinary gross income for federal income tax purposes
as it accrues in advance of the receipt of any cash attributable to such income.
The amount of  original  issue  discount,  if any,  required to be included in a
Regular  Certificateholder's  ordinary  gross  income  for  federal  income  tax
purposes in any taxable year will be computed in accordance with Section 1272(a)
of the Code and the OID Regulations. Under such Section and the OID Regulations,
original issue  discount  accrues on a daily basis                              

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under a constant  yield  method  that  takes into  account  the  compounding  of
interest.  The amount of original  issue  discount to be included in income by a
holder  of a  debt  instrument,  such  as a  Regular  Certificate,  under  which
principal  payments may be subject to  acceleration  because of  prepayments  of
other debt  obligations  securing such  instruments,  is computed by taking into
account the Prepayment Assumption.  The Prospectus Supplement for each series of
Regular  Certificates will specify the Prepayment  Assumption to be used for the
purpose of determining the amount and rate of accrual of OID. No  representation
is made that the Regular  Certificates will prepay at the Prepayment  Assumption
or at any other rate.                                                           

      The amount of original issue discount  included in income by a holder of a
Regular  Certificate  is the sum of the "daily  portions" of the original  issue
discount  for each day during  the  taxable  year on which the  holder  held the
Regular  Certificate.   The  daily  portions  of  original  issue  discount  are
determined by allocating to each day in any "accrual  period" a pro rata portion
of the excess,  if any, of the same of (i) the  present  value of all  remaining
payments to be made on the Regular  Certificate  as of the close of the "accrual
period" and (ii) the payments during the "accrual period" of amounts included in
the stated redemption price of the Regular  Certificate over the "adjusted issue
price" of the Regular  Certificate  at the  beginning of the  "accrual  period."
Generally,  the "accrual period" for the Regular Certificates corresponds to the
intervals at which amounts are paid or  compounded  with respect to such Regular
Certificate,  beginning with their date of issuance and ending with the maturity
date.  The "adjusted  issue price" of a Regular  Certificate at the beginning of
any  accrual  period is the sum of the issue price and  accrued  original  issue
discount for each prior accrual  period  reduced by the amount of payments other
than  payments of  qualified  stated  interest  made  during each prior  accrual
period.  The Code  requires the present  value of the  remaining  payments to be
determined on the bases of (a) the original yield to maturity (determined on the
basis of compounding  at the close of each accrual period and properly  adjusted
for the length of the accrual period), (b) events, including actual prepayments,
which  have  occurred  before  the  close  of the  accrual  period,  and (c) the
assumption  that the  remaining  payments  will be made in  accordance  with the
original  Prepayment  Assumption.  The effect of this method is to increase  the
portions  of  original  issue  discount  that a Regular  Certificateholder  must
include in income to take into account prepayments with respect to the Contracts
held by the  Trust  Fund  that  occur  at a rate  that  exceeds  the  Prepayment
Assumption  and to decrease  (but not below zero for any period) the portions of
original issue discount that a Regular  Certificateholder must include in income
to take into account  prepayments  with respect to the Contracts that occur at a
rate that is slower than the  Prepayment  Assumption.  Although  original  issue
discount will be reported to Regular  Certificateholders based on the Prepayment
Assumption,  no  representation is made to Regular  Certificateholders  that the
Contracts will be prepaid at that rate or at any other rate.                    

      A subsequent  purchaser of a Regular  Certificate will also be required to
include  in such  purchaser's  ordinary  gross  income  for  federal  income tax
purposes the original  issue  discount,  if any,  accruing  with respect to such
Regular  Certificate.  However, if the price paid exceeds the sum of the Regular
Certificate's  issue price plus the aggregate  amount of original issue discount
accrued  with respect to the Regular  Certificate,  but does not equal or exceed
the  outstanding  principal  amount of the  Regular  Certificate,  the amount of
original  issue  discount  to be accrued  will be reduced in  accordance  with a
formula set forth in Section 1272(a)(7)(B) of the Code.                         

      The  Company  believes,  upon the advice of Brown & Wood LLP,  special tax
counsel to the Company,  that the holder of a Regular Certificate  determined to
be issued  with  non-de  minimis  original  issue  discount  will be required to
include the original  issue discount in ordinary gross income for federal income
tax  purposes  computed  in  the  manner  described  above.   However,  the  OID
Regulations either do not address or are subject to varying interpretations with
respect to several issues  concerning the computation of original issue discount
for obligations such as the Regular Certificates.                               

      Variable Rate Regular Certificates. Regular Certificates may bear interest
at a  variable  rate.  Under the OID  Regulations,  if a variable  rate  Regular
Certificate  provides for qualified  stated  interest  payments  computed on the
basis of certain qualified  floating rates or objective rates, then any original
issue  discount on such a Regular  Certificate is computed and accrued under the
same  methodology that applies to Regular  Certificates  paying qualified stated
interest at a fixed  rate.  See the  discussion  above  under  "REMIC  Series --
Original  Issue  Discount."  Accordingly,  if the issue  price of such a Regular
Certificate  is equal to its stated  redemption  price at maturity,  the Regular
Certificate will not have any original issue discount.                          

      For purposes of applying the original  issue  discount  provisions  of the
Code,  all or a portion of the interest  payable with respect to a variable rate
Regular  Certificate may not be treated as qualified  stated interest in certain

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circumstances,  including the following: (i) if the variable rate of interest is
subject to one or more minimum or maximum rate floors or ceilings  which are not
fixed  throughout the term of the Regular  Certificate  and which are reasonably
expected as of the issue date to cause the rate in certain accrual periods to be
significantly  higher or lower than the overall  expected  return on the Regular
Certificate  determined  without  such  floor  or  ceiling;  or  (ii)  if  it is
reasonably expected that the average value of the variable rate during the first
half of the term of the Regular  Certificate will be either  significantly  less
than or  significantly  greater  than the  average  value of the rate during the
final half of the term of the Regular Certificate.  In these situations, as well
as  others,  it is  unclear  under the OID  Regulations  whether  such  interest
payments  constitute  qualified  stated  interest  payments,  or must be treated
either as part of a Regular  Certificate's  stated  redemption price at maturity
resulting in original issue  discount,  or represent  contingent  payments.  The
amended OID Regulations issued on June 11, 1996 generally require the accrual of
original  issue  discount on contingent  payment debt  instruments  based on the
comparable  yield  of  fixed  rate  debt  instruments  with  similar  terms  and
conditions,  followed  by  adjustments  to reflect the  differences  between the
payments so projected and the actual contingent payments. Although the new rules
technically do not adequately  address certain issues relevant to, or applicable
to,  prepayable  securities such as REMIC regular  interests,  in the absence of
other authority,  the Servicer intends to be guided by certain principles of the
OID  Regulations  applicable to variable rate debt  instruments  in  determining
whether  such  Certificates  should be treated  as issued  with  original  issue
discount and in adapting the  provisions  of Section  1272(a)(6)  of the Code to
such   Certificates   for  the  purpose  of  preparing   reports   furnished  to
Certificateholders  and the IRS. Investors acquiring Regular  Certificates whose
rates are subject to the  variations  outlined  above should  consult  their tax
advisors concerning their appropriate tax treatment.                            

      If a variable rate Regular  Certificate is deemed to have been issued with
original  issue  discount,  as  described  above,  the amount of original  issue
discount  accrues on a daily basis under a constant yield method that takes into
account the  compounding  of  interest;  provided,  however,  that the  interest
associated  with such a  Regular  Certificate  generally  is  assumed  to remain
constant  throughout the term of the Regular  Certificate at a rate that, in the
case of a qualified  floating rate, equals the value of such qualified  floating
rate as of the  issue  date of the  Regular  Certificate,  or, in the case of an
objective  rate,  at a fixed rate that  reflects  the yield  that is  reasonably
expected  for the Regular  Certificate.  A holder of such a Regular  Certificate
would then recognize original issue discount during each accrual period which is
calculated  based upon such  Regular  Certificate's  assumed  yield to maturity,
adjusted to reflect the difference between the assumed and actual interest rate.

      Market Discount. Regular Certificates, whether or not issued with original
issue  discount,  will be subject to the market  discount  rules of the Code.  A
purchaser of a Regular  Certificate  who purchases the Regular  Certificate at a
market discount (i.e., a discount from its original issue price plus any accrued
original  issue  discount,  if any,  as  described  above)  will be  required to
recognize  accrued market  discount as ordinary  income as payments of principal
are  received on such  Regular  Certificate  or upon the sale or exchange of the
Regular  Certificate.  In general, the holder of a Regular Certificate may elect
to treat market  discount as accruing  either (i) under a constant  yield method
that is similar to the method for the accrual of original issue discount or (ii)
in  proportion  to  accruals  of  original  issue  discount  (or, if there is no
original issue discount, in proportion to accruals of stated interest),  in each
case computed taking into account the Prepayment Assumption.                    

      The Code  provides  that the  market  discount  in  respect  of a  Regular
Certificate will be considered to be zero if the amount allocable to the Regular
Certificate is less than 0.25% of the Regular  Certificate's  stated  redemption
price at maturity  multiplied by the number of complete  years  remaining to its
maturity after the holder acquired the obligation. If market discount is treated
as de minimis under this rule, the actual  discount  would be allocated  among a
portion of each scheduled distribution  representing the stated redemption price
of such Regular  Certificate and that portion of the discount  allocable to such
distribution  would be reported as income  when such  distribution  occurs or is
due.                                                                            

      The Code further  provides  that any  principal  payment with respect to a
Regular Certificate  acquired with market discount or any gain on disposition of
such Regular  Certificate  shall be treated as ordinary  income to the extent it
does not exceed the accrued  market  discount at the time of such  payment.  The
amount of accrued  market  discount  for purposes of  determining  the amount of
ordinary income to be recognized  with respect to subsequent  payments on such a
Regular  Certificate  is to be  reduced  by the  amount  previously  treated  as
ordinary income.                                                                

      The Code grants authority to the Treasury  Department to issue regulations
providing for the  computation  of accrued market  discount on debt  instruments
such as the Regular  Certificates.  Until such time as  regulations  are        

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issued,  rules described in the legislative  history for these provisions of the
Code will apply.  Under those rules, as described above, the holder of a Regular
Certificate  with market  discount may elect to accrue market discount either on
the basis of a constant  interest  rate or according to certain  other  methods.
Certificateholders who acquire a Regular Certificate at a market discount should
consult their tax advisors  concerning  various  methods which are available for
accruing that market discount.                                                  

      In  general,  limitations  imposed by the Code that are  intended to match
deductions  with the  taxation  of  income  may  require  a holder  of a Regular
Certificate having market discount to defer a portion of the interest deductions
attributable to any indebtedness incurred or continued to purchase or carry such
Regular Certificate.  Alternatively, a holder of a Regular Certificate may elect
to include  market  discount in gross income as it accrues and, if he makes such
an  election,  is  exempt  from  this  rule.  The  adjusted  basis of a  Regular
Certificate  subject  to such  election  will be  increased  to  reflect  market
discount  included in gross income,  thereby reducing any gain or increasing any
loss on a sale or taxable disposition.                                          

      Amortizable  Premium.  A holder  of a  Regular  Certificate  who holds the
Regular Certificate as a capital asset and who purchased the Regular Certificate
at a cost greater than its  outstanding  principal  amount will be considered to
have  purchased the Regular  Certificate at a premium.  In general,  the Regular
Certificateholder may elect to deduct the amortizable bond premium as it accrues
under a constant yield method.  A Regular  Certificateholder's  tax basis in the
Regular  Certificate  will be  reduced  by the  amount of the  amortizable  bond
premium deducted.  In addition,  it appears that the same methods which apply to
the accrual of market discount on installment  obligations are intended to apply
in computing the  amortizable  bond premium  deduction with respect to a Regular
Certificate.  It is not clear,  however,  (i)  whether the  alternatives  to the
constant-yield  method which may be available for the accrual of market discount
are available for amortizing  premium on Regular  Certificates  and (ii) whether
the Prepayment  Assumption  should be taken into account in determining the term
of a Regular Certificate for this purpose.  Certificateholders who pay a premium
for a Regular  Certificate should consult their tax advisors  concerning such an
election and rules for determining the method for amortizing bond premium.      

      On December 30, 1997 the IRS issued final  regulations  ("the  Amortizable
Bond  Premium  Regulations")  dealing  with  amortizable  bond  premium.   These
regulations  specifically do not apply to prepayable debt instruments subject to
Code  Section  1272(a)(6)  such  as the  Regular  Certificates.  Absent  further
guidance  from the IRS,  the  Trustee  intends to account for  amortizable  bond
premium  in  the  manner   described  above.   Prospective   purchasers  of  the
Certificates   should   consult  their  tax  advisors   regarding  the  possible
application of the Amortizable Bond Premium Regulations.                        

      Gain or Loss on Disposition.  If a Regular Certificate is sold, the seller
will recognize gain or loss equal to the difference  between the amount realized
from the sale and the seller's adjusted basis in such Regular  Certificate.  The
adjusted basis generally will equal the cost of such Regular  Certificate to the
seller,  increased  by any  original  issue  discount  included in the  seller's
ordinary gross income with respect to such Regular  Certificate and reduced (but
not below zero) by any payments on the Regular  Certificate  previously received
or accrued by the seller (other than qualified stated interest  payment) and any
amortizable  premium.  Similarly,  a Regular  Certificateholder  who  receives a
principal  payment with respect to a Regular  Certificate will recognize gain or
loss equal to the difference  between the amount of the payment and the holder's
allocable  portion  of his or her  adjusted  basis in the  Regular  Certificate.
Except as discussed below or with respect to market  discount,  any gain or loss
recognized upon a sale, exchange,  retirement, or other disposition of a Regular
Certificate will be capital gain if the Regular Certificate is held as a capital
asset.                                                                          

      Gain from the disposition of a Regular Certificate that might otherwise be
capital  gain,  including any gain  attributable  to de minimis  original  issue
discount,  will be treated as ordinary  income to the extent of the  excess,  if
any, of (i) the amount that would have been  included in the holder's  income if
the yield on such Regular Certificate had equaled 110% of the applicable federal
rate determined as of the beginning of such holder's  holding period,  over (ii)
the amount of ordinary income actually  recognized by the holder with respect to
such Regular Certificate.                                                       

      If it is determined that the Company  intended on the date of issue of the
Regular  Certificates  to call all or any  portion of the  Regular  Certificates
prior to their stated  maturity within the meaning of Section  1271(a)(2)(A)  of
the  Code,  any  gain  realized  upon a sale,  exchange,  retirement,  or  other
disposition of a Regular  Certificate would be considered ordinary income to the
extent  it does not  exceed  the  unrecognized  portion  of the  original  issue
discount,  if any, with respect to the Regular Certificate.  The OID Regulations
provide that the  intention to call rule will not                               

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be applied to mortgage-backed  securities such as the Regular  Certificates.  In
addition, under the OID Regulations,  a mandatory sinking fund or call option is
not evidence of an intention to call.                                           

      Taxation of Residual  Interests.  Generally,  the "daily  portions" of the
taxable  income or net loss of a REMIC will be included  as  ordinary  income or
loss in  determining  the  taxable  income of holders of  Residual  Certificates
("Residual  Holders"),  and will not be taxed separately to the REMIC. The daily
portions are determined by allocating the REMIC's taxable income or net loss for
each calendar quarter ratably to each day in such quarter and by allocating such
daily  portion  among the Residual  Holders in  proportion  to their  respective
holdings of Residual Certificates in the REMIC on such 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
that (i) the  limitation on  deductibility  of investment  interest  expense and
expenses for the  production of income do not apply,  (ii) all bad loans will be
deductible as business bad debts, and (iii) the limitation on the  deductibility
of interest and expenses related to tax-exempt income will apply.  REMIC taxable
income  generally  means a REMIC's gross income,  including  interest,  original
issue discount  income,  and market discount  income,  if any, on the Contracts,
plus income on reinvestment of cash flows and reserve assets,  minus deductions,
including   interest  and  original  issue  discount   expense  on  the  Regular
Certificates,  servicing fees on the Contracts, other administrative expenses of
a REMIC, and amortization of premium, if any, with respect to the Contracts.    

      The taxable  income  recognized  by a Residual  Holder in any taxable year
will be affected by, among other factors, the relationship between the timing of
interest,  original issue discount or market discount income, or amortization of
premium  with  respect  to the  Contracts,  on the one hand,  and the  timing of
deductions  for  interest  (including  original  issue  discount) on the Regular
Certificates,  on the other hand. In the event that an interest in the Contracts
is  acquired  by a REMIC at a  discount,  and one or more of such  Contracts  is
prepaid, the Residual Holder may recognize taxable income without being entitled
to receive a corresponding  cash distribution  because (i) the prepayment may be
used in whole or in part to make distributions on Regular Certificates, and (ii)
the discount on the Contracts  which is included in a REMIC's  income may exceed
its deduction with respect to the  distributions on those Regular  Certificates.
When there is more than one class of Regular  Certificates that receive payments
sequentially (i.e., a fast-pay,  slow-pay structure), this mismatching of income
and  deductions  is  particularly  likely to occur in the early years  following
issuance  of the  Regular  Certificates,  when  distributions  are being made in
respect of  earlier  classes of  Regular  Certificates  to the extent  that such
classes are not issued with substantial discount. If taxable income attributable
to such a 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 Regular  Certificates,  may increase over
time as  distributions  are  made  on the  lower  yielding  classes  of  Regular
Certificates,  whereas  interest  income with respect to any given Contract will
remain constant over time as a percentage of the outstanding principal amount of
that loan (assuming it bears interest at a fixed rate).  Consequently,  Residual
Holders must have sufficient other sources of cash to pay any federal, state, or
local  income  taxes due as a result of such  mismatching,  or such holders must
have unrelated  deductions  against which to offset such income,  subject to the
discussion of "excess  inclusions"  below under "REMIC Series --  Limitations on
Offset or Exemption of REMIC  Income." 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 Holder's
after-tax rate of return.                                                       

      The amount of any net loss of a REMIC  that may be taken  into  account by
the Residual Holder 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 such Residual  Certificate.  Such adjusted  basis will be
increased  by the  amount  of  taxable  income of the  REMIC  reportable  by the
Residual  Holder and decreased by the amount of loss of the REMIC  reportable by
the Residual  Holder. A cash  distribution  from the REMIC also will reduce such
adjusted  basis (but not below zero).  Any loss that is disallowed on account of
this limitation may be carried over indefinitely by the Residual Holder for whom
such loss was disallowed and may be used by such Residual  Holder only to offset
any income generated by the same REMIC.                                         

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      If a Residual  Certificate  has a negative  value, it is not clear whether
its issue  price  would be  considered  to be zero or such  negative  amount for
purposes of determining the REMIC's basis in its assets.  The REMIC  Regulations
imply that residual  interest  cannot have a negative  basis or a negative issue
price.  However,  the preamble to the REMIC  Regulations  indicates that,  while
existing tax rules do not accommodate such concepts,  the Service is considering
the tax treatment of these types of residual interests, including the proper tax
treatment  of a payment  made by the  transferor  of such  residual  interest to
induce  the  transferee  to  acquire  that  interest.   Absent   regulations  or
administrative  guidance to the contrary, the Company does not intend to treat a
class of Residual  Certificates as having a value of less than zero for purposes
of determining the basis of the related REMIC in its assets.                    

      Further,  to the  extent  that the  initial  adjusted  basis of a Residual
Holder(other  than an original  holder) in the Residual  Certificate  is greater
than the  corresponding  portion  of the  REMIC's  basis in the  Contracts,  the
Residual  Holder will not recover a portion of such basis until  termination  of
the REMIC  unless  Treasury  Regulations  yet to be issued  provide for periodic
adjustments to the REMIC income otherwise reportable by such holder.            

      Treatment  of Certain  Items of REMIC  Income and  Expense.  Generally,  a
REMIC's  deductions  for original  issue discount will be determined in the same
manner as original issue discount  income on Regular  Certificates  as described
above under "REMIC  Series -- Original  Issue  Discount"  and "-- Variable  Rate
Regular Certificates," without regard to the de minimis rule described therein. 

      The REMIC will have market discount income in respect of the Contracts if,
in general, the basis of the REMIC in such Contracts is exceeded by their unpaid
principal  balances.  The REMIC's basis in such  Contracts is generally the fair
market value of the  Contracts  immediately  after the  transfer  thereof to the
REMIC (which may equal a  proportionate  part of the aggregate fair market value
of the REMIC  Certificates).  In  respect  of the  Contracts  that  have  market
discount  to which  Code  Section  1276  applies,  the  market  discount  income
generally  should  accrue in the manner  described  above under "REMIC Series --
Market Discount."                                                               

      Generally,  if the basis of a REMIC in the  Contracts  exceeds  the unpaid
principal  balances thereof,  the REMIC will be considered to have acquired such
Contracts at a premium equal to the amount of such excess.  As stated above, the
REMIC's  basis in the  Contracts  is the  fair  market  value  of the  Contracts
immediately  after the transfer thereof to the REMIC.  Generally,  a person that
holds a  Contract  as a  capital  asset  may elect to  amortize  premium  on the
Contracts  under a constant  interest  method.  See the discussion  under "REMIC
Series -- Amortizable Premium."                                                 

      Limitations on Offset or Exemption of REMIC Income. If the aggregate value
of the  Residual  Certificates  relative to the  aggregate  value of the Regular
Certificates  and Residual  Certificates is considered to be  "significant,"  as
described  below,  then a  portion  (but not all) of the  REMIC  taxable  income
included in determining  the federal  income tax liability of a Residual  Holder
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 such
quarterly period of (i) 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 Section  1274(d) of the Code,  multiplied by (ii) the adjusted
issue price of such  Residual  Certificate  at the  beginning of such  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 such daily  accruals of REMIC income  described in this  paragraph
for all prior quarters  decreased by any distributions made with respect to such
Residual  Certificate prior to the beginning of such quarterly period. The value
of the Residual  Certificates  would be significant in cases where the aggregate
issue price of the Residual  Certificates  is at least 2% of the aggregate issue
price of the Regular Certificates and Residual Certificates, and the anticipated
weighted  average  life of the  Residual  Certificates  is at  least  20% of the
anticipated weighted average life of the REMIC.                                 

      The portion of a Residual  Holder's REMIC taxable income consisting of the
excess  inclusions  generally  may not be  offset  by other  deductions  on such
Residual  Holder's tax return,  including  net  operating  loss carry  forwards.
Further,  if the  Residual  Holder  is an  organization  subject  to the  tax on
unrelated  business  income  imposed by Section  511 of the Code,  the  Residual
Holder's excess inclusions will be treated an unrelated  business taxable income
of such Residual Holder for purposes of Section 511.  Finally,  if a real estate
investment trust or regulated investment company owns a Residual Certificate,  a
portion  (allocated  under Treasury  Regulations  yet to be issued) of dividends
paid by such real estate investment trust or 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 certain  persons who are not U.S.
persons.                                                                        
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      The Small  Business Job  Protection Act of 1996 has eliminated the special
rule permitting  Section 593  institutions  ("thrift  institutions")  to use net
operating losses and other allowable deductions to offset their excess inclusion
income from REMIC residual certificates that have "significant value" within the
meaning of the REMIC  Regulations,  effective for taxable years  beginning after
December 31, 1995,  except with  respect to residual  certificates  continuously
held by a thrift institution since November 1, 1995.                            

      In addition,  the Small Business Job Protection Act of 1996 provides three
rules for determining the effect on excess inclusions on the alternative minimum
taxable income of a residual holder.  First,  alternative minimum taxable income
for such residual  holder is determined  without regard to the special rule that
taxable  income  cannot be less  than  excess  inclusions.  Second,  a  residual
holder's  alternative  minimum taxable income for a tax year cannot be less than
the excess inclusions for the year. Third, the amount of any alternative minimum
tax net operating loss deductions must be computed  without regard to any excess
inclusions. These rules are effective for tax years beginning after December 31,
1986, unless a residual holder elects to have such rules apply only to tax years
beginning after August 20, 1996.                                                

      Restrictions  on Transfer of Residual  Certificates.  As  described  above
under  "REMIC  Series --  Qualification  as a REMIC," an  interest in a Residual
Certificate may not be transferred to a Disqualified Organization.  If any legal
or beneficial interest in a Residual Certificate is, nonetheless, transferred to
a  Disqualified  Organization,  a tax would be imposed in an amount equal to the
product of (i) the present value of the total anticipated excess inclusions with
respect to such Residual  Certificate  for periods after the transfer,  and (ii)
the highest  marginal  federal income tax rate applicable to  corporations.  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 Section 1274(d)
of the Code as of the date of the transfer for a term ending on the close of the
last quarter in which  excess  inclusions  are expected to accrue.  Such rate is
applied  to the  anticipated  excess  inclusions  from the end of the  remaining
calendar  quarters in which they arise to the date of the  transfer.  Such a tax
generally would be imposed on the transferor of the Residual Certificate, except
that where such transfer is through an agent  (including a broker,  nominee,  or
other  middleman)  for a  Disqualified  Organization,  the tax would  instead by
imposed on such agent.  However, a transferor of a Residual Certificate would in
no event be liable for such tax with  respect to a  transfer  if the  transferee
furnishes to the transferor an affidavit,  under penalties of perjury,  that the
transferee  is  not a  Disqualified  Organization  and,  as of the  time  of the
transfer,  the transferor does not have the actual knowledge that such 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  such  amount of tax as the  Treasury  Department  may  require
(presumably, a corporate tax on the excess inclusion for the period the residual
interest is actually held by the Disqualified Organization).                    

      In  addition,  if a  "Pass-Through  Entity" (as defined  below) 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
such  entity,  then a tax is imposed on such entity  equal to the product of (i)
the amount of excess  inclusions on the Residual  Certificate that are allocable
to the interest in the  Pass-Through  Entity  during the period such interest is
held by such  Disqualified  Organization,  and (ii) the highest marginal federal
income tax rate imposed on  corporations.  Such tax would be deductible from the
ordinary gross income of the Pass-Through Entity during the period such interest
is held by such  Disqualified  Organization,  and  (iii)  the  highest  marginal
federal  income tax rate imposed on  corporations.  Such 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 such tax if it has received an
affidavit  from such record  holder that it is not a  Disqualified  Organization
and,  during  the  period  such  person is the  record  holder  of the  Residual
Certificate,  the Pass-Through Entity would not be liable for such tax if it has
received  an  affidavit  from such record  holder that it is not a  Disqualified
Organization  and,  during the period  such  person is the record  holder of the
Residual  Certificate,  the  Pass-Through  Entity does not have actual knowledge
that such affidavit is false.                                                   

      For these purposes, a "Pass-Through Entity" means any regulated investment
company, real estate investment trust, common trust fund, partnership,  trust or
estate and certain 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 such
interest, be treated as a Pass-Through Entity.                                  

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      Noneconomic  Residual  Interests.  The REMIC  Regulations  would disregard
certain 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.  Under the REMIC  Regulations,  a  transfer  of a  "noneconomic  residual
interest" (as defined below) to a Residual Holder is disregarded for all federal
income tax  purposes if a  significant  purpose of the transfer is to enable the
transferor 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 transfer, (i) 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 (ii) 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.  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 (i)
the  transferor   conducted,   at  the  time  of  the  transfer,   a  reasonable
investigation  of the financial  condition of the  transferee and found that the
transferee  had  historically  paid  its  debts as they  came  due and  found no
significant  evidence to indicate that the  transferee  will not continue to pay
its debts as they come due in the future; and (ii) the transferee  represents to
the  transferor  that it  understands  that,  as the  holder  of a  non-economic
residual  interest,  the transferee  may incur tax  liabilities in excess of any
cash flows  generated  by the interest  and that the  transferee  intends to pay
taxes  associated  with  holding the  residual  interest as they become due. The
Pooling  and  Servicing   Agreement   with  respect  to  each  series  of  REMIC
Certificates will require the transferee of a Residual Certificate to certify to
the statements in clause (ii) of the preceding sentence as part of the affidavit
described above under "Restrictions on Transfer of Residual Certificates."      

      Mark-to-Market   Rules.  On  December  23,  1996,  the  Service  finalized
regulations (the "Mark-to-Market  Regulations") relating to the requirement that
a securities dealer mark-to-market  securities held for sale to customers.  This
mark-to-market  requirement applies to all securities owned by a dealer,  except
to the extent that the dealer has specifically identified a security as held for
investment.  The regulations  provide that a REMIC residual interest acquired on
or after January 4, 1995,  will not be considered a security for purposes of the
Mark-to-Market  Regulations,  and  thus,  such  interests  may not be  marked to
market.                                                                         

      Sale or Exchange of a Residual Certificate. Upon the sale or exchange of a
Residual  Certificate,  the Residual Holder will recognize gain or loss equal to
the excess,  if any, of the amount realized over the adjusted basis as described
above of such Residual  Holder in such Residual  Certificate  at the time of the
sale or exchange.  In addition to reporting the taxable  income of the REMIC,  a
Residual   Holder  will  have  taxable  income  to  the  extent  that  any  cash
distribution  to him  from  the  REMIC  exceeds  such  adjusted  basis  on  that
Distribution Date. Such income will be treated as gain from the sale or exchange
of the Residual  Certificate.  It is possible that the  termination of the REMIC
may  be  treated  as  a  sale  or  exchange  of  a  Residual  Holder's  Residual
Certificate,  in which case, if the Residual Holder has an adjusted basis in his
Residual Certificate remaining when his interest in the REMIC terminates, and if
he holds such Residual  Certificate as a capital asset, then he will recognize a
capital loss at that time in the amount of such remaining adjusted basis.       

      The  Conference  Committee  Report to the Tax Reform Act of 1986  provides
that,  except as provided in Treasury  Regulations,  the wash sale rules of 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 such sale or disposition,  acquires (or enters into any other  transaction
that results in the  application of Code 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.         

      Certain Other Taxes on the REMIC.  The REMIC provisions of the Code impose
a 100%  tax on any  net  income  derived  by a  REMIC  from  certain  prohibited
transactions,   and   prohibits   deducting   any  loss  with  respect  to  such
transactions.  Such  transactions  are:  (i)  any  disposition  of  a  qualified
mortgage,  other than pursuant to the  substitution  of a qualified  replacement
mortgage for a qualified  mortgage (or the repurchase in lieu of substitution of
a defective obligation), a disposition incident to the foreclosure,  default, or
imminent default of a mortgage,  the                                            

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bankruptcy or insolvency of the REMIC, or a qualified  liquidation of the REMIC;
(ii) the  receipt of income  from  assets  other than  qualified  mortgages  and
permitted investments;  (iii) the receipt of compensation for services; and (iv)
the receipt of gain from the  dispositions of cash flow  investments.  The REMIC
Regulations  provide that the modification of the terms of a Contract occasioned
by default or a reasonably  foreseeable default of the Contract,  the assumption
of the  Contract,  the waiver of a  due-on-sale  clause or the  conversion of an
interest   rate  by  an  Obligor   pursuant  to  the  terms  of  a   convertible
adjustable-rate  Contract will not be treated as a disposition  of the Contract.
In the event that a REMIC holds  Convertible  ARM Loans which are convertible at
the option of the Obligor  into  fixed-rate,  fully  amortizing,  level  payment
Contracts,  a sale  of  such  Contracts  by the  REMIC  pursuant  to a  purchase
agreement or other  contract  with the Company or other  party,  if and when the
Obligor  elects to so convert  the terms of the  Contract,  is not  expected  to
result in a prohibited  transaction for the REMIC.  The Code also imposes a 100%
tax on  contributions  to a REMIC  made  after  the  Startup  Day,  unless  such
contributions  are  payments  made to  facilitate  a cleanup call or a qualified
liquidation  of the REMIC,  payments in the nature of a guaranty,  contributions
during the three-month period beginning on the Startup Day or contributions to a
qualified  reserve  fund of the REMIC by a holder of a residual  interest in the
foreclosure  property  that the REMIC derives at the highest  corporate  rate on
certain net income from  foreclosure  property  that the REMIC  derives from the
management,  sale, or disposition of any real property, or any personal property
incident  thereto,  acquired  by the REMIC in  connection  with the  default  or
imminent default of a loan.  Generally,  it is not anticipated that a REMIC will
generate a significant amount of such income.                                   

      Liquidation of the REMIC. A REMIC may liquidate  without the imposition of
entity-level tax only in a "qualified  liquidation." A liquidation is considered
qualified  if a  REMIC  adopts  a plan of  complete  liquidation  (which  may be
accomplished by designating in the REMIC's final tax return a date on which such
adoption  is deemed to occur)  and sells all of its  assets  (other  than  cash)
within the ninety-day  period  beginning on the date of the adoption of the plan
of  liquidation,  provided that it distributes to holders of Regular or Residual
Certificates,  on or before the last day of the ninety-day  liquidation  period,
all the proceeds of the liquidation  (including all cash), less amounts retained
to meet claims.                                                                 

      Taxation of Certain Foreign Investors.  For purposes of this discussion, a
"Foreign Holder" is a Certificateholder  who holds a Regular Certificate and who
is not (i) a citizen or  resident  of the  United  States,  (ii) a  corporation,
partnership or other entity  treated as a corporation or partnership  for United
States federal income tax purposes, organized in or under the laws of the United
States, any state thereof or the District of Columbia (unless,  in the case of a
partnership,  Treasury  regulations  provide  otherwise),  (iii) an estate,  the
income of which is  included  in gross  income  for United  States tax  purposes
regardless of its source, or (iv) a trust if a court within the United States is
able to exercise primary  supervision of the administration of the trust and one
or more United  States  persons have the  authority  to control all  substantial
decisions of the trust.  Notwithstanding the preceding  sentence,  to the extent
provided in Treasury regulations, certain trusts in existence on August 20, 1996
and treated as United  States  persons prior to such date that elect to continue
to be treated as United States persons will not be considered  Foreign  Holders.
Unless the interest on a Regular  Certificate is effectively  connected with the
conduct by the Foreign  Holder of a trade or business  within the United States,
the  Foreign  Holder is not  subject to  federal  income or  withholding  tax on
interest (or original issue discount,  if any) on a Regular Certificate (subject
to possible backup  withholding of tax,  discussed below),  provided the Foreign
Holder is not a controlled foreign  corporation  related to the Company and does
not own  actually  or  constructively  10% or more of the  voting  stock  of the
Company. To qualify for this tax exemption,  the Foreign Holder will be required
to provide periodically a statement signed under penalties of perjury certifying
that the Foreign Holder meets the requirements for treatment as a Foreign Holder
and providing the Foreign Holder's name and address. The statement, which may be
made on a Form W-8 or substantially  similar substitute form,  generally must be
provided in the year a payment  occurs or in either of the two preceding  years.
This  exemption  may not  apply to a  Foreign  Holder  that  owns  both  Regular
Certificates and Residual Certificates. If the interest on a Regular Certificate
is  effectively  connected  with the  conduct by a Foreign  Holder of a trade or
business  within the United  States,  then the Foreign Holder will be subject to
tax at  regular  graduated  rates.  Foreign  Holders  should  consult  their own
advisors  regarding  the  specific  tax  consequences  of their owning a Regular
Certificate.                                                                    

      New Withholding  Regulations.  On October 6, 1997, the Treasury Department
issued new regulations (the "New Regulations") which make certain  modifications
to the withholding, backup withholding and information reporting rules described
above.  The New  Regulations  attempt to unify  certification  requirements  and
modify                                                                          

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reliance standards. The New Regulations will generally be effective for payments
made after December 31, 1999, subject to certain  transition rules.  Prospective
investors  are  urged  to  consult  their  own tax  advisors  regarding  the New
Regulations.                                                                    

      Any gain  recognized by a Foreign Holder upon a sale,  retirement or other
taxable  disposition of a Regular  Certificate  generally will not be subject to
United  States  federal  income tax unless  either (i) the  Foreign  Holder is a
non-resident  alien  individual  who holds the Regular  Certificate as a capital
asset  and who is  present  in the  United  States  for 183  days or more in the
taxable year of the disposition,  or (ii) the gain is effectively connected with
the  conduct  by the  Foreign  Holder of a trade or  business  within the United
States.                                                                         

      A Regular  Certificate  will not be  included  in the  estate of a Foreign
Holder who does not own  actually  or  constructively  10% or more of the voting
stock of the Company.                                                           

      Backup Withholding. Under certain circumstances, a REMIC Certificateholder
may be subject to "backup  withholding"  at a 31% rate.  Backup  withholding may
apply to a REMIC  Certificateholder who is a United States person if the holder,
among other circumstances,  fails to furnish his Social Security number or other
taxpayer  identification  number to the Trustee.  Backup  withholding may apply,
under  certain  circumstances,  to a REMIC  Certificateholder  who is a  Foreign
Holder if the REMIC  Certificateholder fails to provide the Trustee or the REMIC
Certificateholder's  securities broker with the statement necessary to establish
the exemption from federal income and  withholding  tax on interest on the REMIC
Certificates.  Backup  withholding,  however,  does not apply to  payments  on a
Certificate  made  to  certain  exempt  recipients,  such  as  corporations  and
tax-exempt    organizations,    and   to   certain   foreign   persons.    REMIC
Certificateholders  should consult their tax advisors for additional information
concerning the potential  application of backup withholding to payments received
by them with respect to a Certificate.                                          

      Reporting  Requirements  and Tax  Administration.  The Company will report
annually to the Service,  holders of record of the Regular Certificates that are
not excepted from the reporting  requirements and, to the extent required by the
Code, other interested parties, information with respect to the interest paid or
accrued on the Regular  Certificates,  original issue discount, if any, accruing
on the Regular Certificates and information  necessary to compute the accrual of
any  market  discount  or  the  amortization  of  any  premium  on  the  Regular
Certificates.                                                                   

      The  Treasury  Department  has  issued  temporary  regulations  concerning
certain aspects of REMIC tax administration. Under those regulations, a Residual
Certificateholder  must be designated  as the REMIC's "tax matters  person." The
tax matters person,  generally,  has responsibility for overseeing and providing
notice to the other Residual  Certificateholders  of certain  administrative and
judicial  proceedings  regarding  the REMIC's tax  affairs.  The Company will be
designated as tax matters  person for each REMIC,  and in  conjunction  with the
Trustee  will  act  as  the  agent  of the  Residual  Certificateholders  in the
preparation  and filing of the REMIC's  federal  and state  income tax and other
information returns.                                                            

Grantor Trust Series                                                            

      Tax Status of the Trust Fund.  In the case of a Trust Fund  evidenced by a
series or sub-series of  Certificates,  or a segregated  portion  thereof,  with
respect to which a REMIC Election is not made ("Non-REMIC Certificates"),  Brown
& Wood LLP,  special tax counsel to the  Company,  will have advised the Company
that,  in  their  opinion,   each  Contract  Pool  and  the  arrangement  to  be
administered  by the Company  under which the Trustee  will hold and the Company
will be  obligated  to service the  Contracts  and  pursuant to which  Non-REMIC
Certificates  will  be  issued  to  Non-REMIC  Certificateholders  will  not  be
classified as an  association  taxable as a corporation  or a "taxable  mortgage
pool," within the meaning of Code Section 7701(i), but rather will be classified
as a grantor  trust  under  Subpart  E, Part I of  Subchapter  J of Chapter 1 of
Subtitle A of the Code. Each Non-REMIC  Certificateholder will be treated as the
owner of a pro  rata  undivided  interest  in the  ordinary  income  and  corpus
portions of the trust attributable to the Contract Pool in which its Certificate
evidences an ownership  interest and will be considered the equitable owner of a
pro rata undivided interest in each of the Contracts included therein.          

      Tax Status of Non-REMIC Certificates. In general, (i) Certificates held by
a  "domestic  building  and loan  association"  within  the  meaning  of Section
7701(a)(19) of the Code may be considered to represent "qualifying real property
loans"  within the meaning of Section  7701(a)(19)(C)(v)  of the Code;  and (ii)
Certificates  held by a real estate investment trust may constitute "real estate
assets"  within the  meaning of Section  856(c)(5)(B)  of the Code              

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and  interest  thereon may be  considered  "interest on  obligations  secured by
mortgages on real property"  within the meaning of Section  856(c)(3)(B)  of the
Code. See the discussions of such Code provisions  above under "REMIC Series Tax
Status of REMIC  Certificates."  Investors should review the related  Prospectus
Supplement for the treatment of Non-REMIC  Certificates  and Contracts,  if any,
under these Code  sections and should,  in addition,  consult with their own tax
advisors with respect to these matters.                                         

      Tax Treatment of Non-REMIC Certificates. Non-REMIC Certificateholders will
be  required  to report on their  federal  income tax  returns,  and in a manner
consistent with their respective methods of accounting,  their pro rata share of
the entire income  arising from the  Contracts  comprising  such Contract  Pool,
including interest, original issue discount, if any, prepayment fees, assumption
fees,  and late  payment  charges  received  by the  Company,  and any gain upon
disposition  of such  Contracts.  (For  purposes  of this  discussion,  the term
"disposition,"  when used with respect to the Contracts,  includes  scheduled or
prepaid  collections  with  respect  to the  Contracts,  as well as the  sale or
exchange  of a  Non-REMIC  Certificate.)  Non-REMIC  Certificateholders  will be
entitled  under Section 162 or 212 of the Code to deduct their pro rata share of
related  servicing  fees,   administrative  and  other  non-interest   expenses,
including  assumption fees and late payment charges retained by the Company.  An
individual,  an estate,  or a trust that holds a  Non-REMIC  Certificate  either
directly  or  through a  pass-through  entity  will be  allowed  to deduct  such
expenses under Section 212 of the Code only to the extent that, in the Aggregate
and  combined  with certain  other  itemized  deductions,  they exceed 2% of the
adjusted  gross  income  of the  holder.  In  addition,  Section  68 of the Code
provides that the amount of itemized deductions (including those provided for in
Section  212 of the  Code)  otherwise  allowable  for the  taxable  year  for an
individual  whose adjusted gross income exceeds a threshold  amount specified in
the Code will be reduced by the lesser of (i) 3% of the excess of adjusted gross
income over the specified threshold amount or (ii) 80% of the amount of itemized
deductions  otherwise  allowable  for such  taxable  year.  To the extent that a
Non-REMIC  Certificateholder is not permitted to deduct servicing fees allocable
to  a   Non-REMIC   Certificate,   the   taxable   income   of   the   Non-REMIC
Certificateholder attributable to that Non-REMIC Certificate will exceed the net
cash  distributions  related to such income.  Non-REMIC  Certificateholders  may
deduct any loss on  disposition of the Contracts to the extent  permitted  under
the Code.                                                                       

      Under current Service  interpretations of applicable Treasury  Regulations
the  Company  would be able to sell or  otherwise  dispose  of any  subordinated
Non-REMIC Certificates.  Accordingly,  the Company expects to offer subordinated
Non-REMIC  Certificates for sale to investors.  In general,  such  subordination
should not affect the federal income tax treatment of either the subordinated or
senior  Certificates.  Holders of subordinated classes of Certificates should be
able to  recognize  any  losses  allocated  to such class when and if losses are
realized.                                                                       

      To the extent that any of the  Contracts  comprising a Contract  Pool were
originated  on or after  March 2, 1984 and under  circumstances  giving  rise to
original issue discount,  Certificateholders will be required to report annually
an amount of additional  interest  income  attributable to such discount in such
Contracts prior to receipt of cash related to such discount.  See the discussion
above  under  "REMIC  Series  --  Original  Issue  Discount."  Similarly,   Code
provisions  concerning market discount and amortizable premium will apply to the
Contracts  comprising  a  Contract  Pool  to the  extent  that  the  loans  were
originated  after July 18, 1984 and  September 27, 1985,  respectively.  See the
discussions  above under "REMIC Series -- Market  Discount" and "REMIC Series --
Amortizable Premium."                                                           

      It is not clear whether a reasonable  prepayment assumption should be used
in  computing  amortization  of premium  allowable  under Code Section 171 or in
computing the accrual of market  discount for non-REMIC  Certificates.  However,
the use of a Prepayment  Assumption is required for purposes of calculating  OID
for tax years  beginning after August 5, 1997, to pools of receivables the yield
on which may be affected by reason of prepayments.  Previous legislative history
states that Congress  intends that if a Prepayment  Assumption  would be used to
calculate OID then it should also be used to accrue market discount and amortize
bond premium.  Because regulations have not yet been issued, it is impossible to
predict  what effect  those  regulations  might have on the tax  treatment  of a
Certificate  purchased  at a  discount  or  premium  in  the  secondary  market.
Prospective investors are urged to consult their own tax advisors concerning the
tax treatment of a Certificate purchased at a discount or a premium.            

      If premium is not subject to  amortization  using a reasonable  Prepayment
Assumption, the holder of a Certificate acquired at a premium should recognize a
loss, if a Contract repays in full, equal to the difference  between the portion
of the  prepaid  principal  amount of such  Contract  that is  allocable  to the
Certificate  and the                                                            

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portion  of the  adjusted  basis of the  Certificate  that is  allocable  to the
Contract.  If a  reasonable  Prepayment  Assumption  is  used to  amortize  such
premium,  it appears  that such a loss would be  available,  if at all,  only if
prepayments  have  occurred  at  a  rate  faster  than  the  reasonable  assumed
prepayment rate. It is not clear whether any other adjustments would be required
to reflect the  differences  between an assumed  prepayment  rate and the actual
rate of prepayments. In addition, under recent legislation,  amounts received on
the  redemption  of an  obligation  issued by a natural  person  are  considered
received in exchange of such  obligation if the debt  obligation is purchased or
issued  after June 8, 1997  (i.e.,  treated  the same as  obligations  issued by
corporations).  This change could  affect the  character of any such loss (e.g.,
cause the loss to be  treated  as  capital  if such  assets  are held as capital
assets by the taxpayer).                                                        

      Stripped Non-REMIC Certificates. Certain classes of Non-REMIC Certificates
may be subject to the  stripped  bond rules of Section  1286 of the Code and for
purposes of this discussion will be referred to as "Stripped  Certificates."  In
general, a Stripped Certificate will be subject to the stripped bond rules where
there has been a separation  of ownership of the right to receive some or all of
the principal payments on a Contract from ownership of the right to receive some
or all of the related interest payments.  Non-REMIC Certificates will constitute
Stripped  Certificates  and  will  be  subject  to  these  rules  under  various
circumstances,  including the following:  (i) if any servicing  compensation  is
deemed to exceed a  reasonable  amount;  (ii) if the  Company or any other party
retains a Retained  Yield with  respect to the  Contracts  comprising a Contract
Pool;  (iii)  if two or  more  classes  of  Non-REMIC  Certificates  are  issued
representing  the right to non-pro rata percentages of the interest or principal
payments on the Contracts;  or (iv) if Non-REMIC  Certificates  are issued which
represent the right to interest only payments or principal only payments.       

      Although  not  entirely  clear,  each  Stripped   Certificate   should  be
considered to be a single debt instrument  issued on the day it is purchased for
purposes of  calculating  any original issue  discount.  Original issue discount
with  respect to a Stripped  Certificate,  if any,  must be included in ordinary
gross income for federal  income tax purposes as it accrues in  accordance  with
the  constant-yield  method that takes into account the  compounding of interest
and  such  accrual  of  income  may be in  advance  of the  receipt  of any cash
attributable  to such  income.  See "REMIC  Series -- Original  Issue  Discount"
above.  For purposes of applying the original issue  discount  provisions of the
Code, the issue price of a Stripped  Certificate will be the purchase price paid
by each holder thereof and the stated  redemption  price at maturity may include
the  aggregate  amount of all  payments to be made with  respect to the Stripped
Certificate whether or not denominated as interest. The amount of original issue
discount with respect to a Stripped Certificate may be treated as zero under the
original  issue  discount de minimis  rules  described  above.  A purchaser of a
Stripped  Certificate  will be  required  to  account  for any  discount  on the
certificate as market discount rather than original issue discount if either (i)
the amount of  original  issue  discount  with  respect to the  certificate  was
treated as zero  under the  original  issue  discount  de minimis  rule when the
certificate  was stripped or (ii) no more than 100 basis points  (including  any
amount of servicing in excess of  reasonable  servicing)  is stripped off of the
Contracts. See "REMIC Series -- Market Discount" above.                         

      When an investor purchases more than one class of Stripped Certificates it
is currently  unclear  whether for federal  income tax purposes  such classes of
Stripped Certificates should be treated separately or aggregated for purposes of
applying the original issue discount rules described above.                     

      It is possible that the Service may take a contrary  position with respect
to some or all of the foregoing  tax  consequences.  For example,  a holder of a
Stripped  Certificate  may be treated as the owner of (i) as many stripped bonds
or stripped coupons as there are scheduled payments of principal and/or interest
on each  Contract or (ii) a separate  installment  obligation  for each Contract
representing the Stripped Certificate's pro rata share of price; and/or interest
payments  to be made  with  respect  thereto.  As a  result  of  these  possible
alternative  characterizations,  investors should consult their own tax advisors
regarding the proper  treatment of Stripped  Certificates for federal income tax
purposes.                                                                       

      It is unclear under what circumstance, if any, the prepayment of Contracts
will give rise to a loss to the holder of a Stripped Bond Certificate  purchased
at a premium or a Stripped Coupon Certificate. If such Certificate is treated as
a single  instrument  (rather  than an interest in discrete  contracts)  and the
effect of prepayments  is taken into account in computing  yield with respect to
such  Certificate,  it appears that no loss will be available as a result of any
particular prepayment unless prepayments occur at a rate faster than the assumed
prepayment  rate.  However,  if such  Certificate  is treated as an  interest in
discrete Contracts, or if no prepayment assumption is used, then when           

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a  Contract  is  prepaid,  the  holder  of such  Certificate  should  be able to
recognize  a loss  equal  to the  portion  of the  unrecovered  premium  of such
Certificate that is allocable to such Contract. In addition, amounts received in
redemption for debt  instruments  issued by natural persons  purchased or issued
after June 8, 1997 are treated as received in exchange  thereof  (i.e.,  treated
the same as obligations  issued by  corporations).  This change could affect the
character of any loss. Holders of Stripped Bond Certificates and Stripped Coupon
Certificates  are urged to consult  with their own tax  advisors  regarding  the
proper treatment of these Certificates for federal income tax purposes.         

      Gain  or  Loss on  Disposition.  Upon  sale  or  exchange  of a  Non-REMIC
Certificate, a Non-REMIC  Certificateholder will recognize gain or loss equal to
the  difference  between  the  amount  realized  in the sale  and its  aggregate
adjusted  basis  in the  Contracts  represented  by the  Non-REMIC  Certificate.
Generally,   the   aggregate   adjusted   basis   will   equal   the   Non-REMIC
Certificateholder's  cost for the Non-REMIC  Certificate increased by the amount
of any previously  reported gain with respect to the Non-REMIC  Certificate  and
decreased by the amount of any losses  previously  reported  with respect to the
Non-REMIC  Certificate  and the amount of any  distributions  received  thereon.
Except as provided  above with respect to the original issue discount and market
discount  rules,  any such  gain or loss  would be  capital  gain or loss if the
Non-REMIC  Certificate was held as a capital asset. See "REMIC Series -- Gain or
Loss on Disposition" above.                                                     

      Recharacterization  of Servicing  Fees. The servicing  compensation  to be
received  by the  Servicer  may be  questioned  by the Service  with  respect to
certain Certificates or Contracts as exceeding a reasonable fee for the services
being  performed  in  exchange  therefor,   and  a  portion  of  such  servicing
compensation  could be  recharacterized as an ownership interest retained by the
Servicer  or other  party  in a  portion  of the  interest  payments  to be made
pursuant to the Contracts.  In this event,  a Certificate  might be treated as a
Stripped  Certificate  subject to the stripped bond rules of Section 1286 of the
Code and the  original  issue  discount  provisions  rather  than to the  market
discount and premium rules. See the discussion above under "Non-REMIC  Series --
Stripped Non-REMIC Certificates."                                               

      Tax  Treatment  of  Certain  Foreign  Investors.  Generally,  interest  or
original  issue  discount  paid to or  accruing  for the  benefit of a Non-REMIC
Certificateholder  who is a Foreign  Holder  (as  defined  in  "REMIC  Series --
Taxation of Certain Foreign Investors") will be treated as "portfolio  interest"
and  therefore  will be exempt  from the 30%  withholding  tax.  Such  Non-REMIC
Certificateholder  will be entitled to receive  interest  payments  and original
issue  discount on the  Non-REMIC  Certificates  free of United  States  federal
income tax, but only to the extent the Contracts were originated  after July 18,
1984 and provided that such Non-REMIC  Certificateholder  periodically  provides
the Trustee (or other person who would  otherwise  be required to withhold  tax)
with a  statement  certifying  under  penalty  of  perjury  that such  Non-REMIC
Certificateholder  is a Foreign Holder and provides the name and address of such
Non-REMIC  Certificateholder.  For additional information concerning interest or
original  issue  discount  paid  by the  Company  to a  Foreign  Holder  and the
treatment of a sale or exchange of a Non-REMIC  Certificate by a Foreign Holder,
which will  generally  have the same tax  consequences  as the sale of a Regular
Certificate, see the discussion above under "REMIC Series -- Taxation of Certain
Foreign Investors". In addition, payments of interest or original issue discount
made to a Foreign  Investor after December 31, 1999 will generally be subject to
the New Regulations. See discussion above under "REMIC Series -- New Withholding
Regulations."                                                                   

      Tax  Administration  and  Reporting.  The  Company  will  furnish  to each
Non-REMIC Certificateholder with each distribution a statement setting forth the
amount of such distribution allocable to principal and to interest. In addition,
the  Company  will  furnish,  within a  reasonable  time  after  the end of each
calendar year, to each Non-REMIC  Certificateholder  who was a Certificateholder
at any time  during such year,  information  regarding  the amount of  servicing
compensation  received  by the  Company  and any  sub-servicer  and  such  other
customary  factual  information  as the Company deems  necessary or desirable to
enable  Certificateholders  to prepare  their tax returns.  Reports will be made
annually to the Service and to holders of record that are not expected  from the
reporting  requirements regarding information as may be required with respect to
interest and original  issue  discount,  if any,  with respect to the  Non-REMIC
Certificates.                                                                   

FASIT Securities                                                                

      Qualification  as a FASIT. In the case of a Trust Fund underlying a Series
(or one or more  designated  pools of assets held in the Trust Fund) for which a
REMIC election is not made, Brown & Wood LLP, special tax counsel to            

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the Company may advise the Company  that in their  opinion,  the Trust Fund will
qualify  under the Code as a Financial  Asset  Securitization  Investment  Trust
("FASIT")  in  which  the  FASIT  Regular  Securities  and the  FASIT  Ownership
Securities   will   constitute  the  "regular   interests"  and  the  "ownership
interests,"  respectively,  if (i) a FASIT  election is in effect,  (ii) certain
tests concerning (A) the composition of the FASIT's assets and (B) the nature of
the  Securityholders'  interests in the FASIT are met on a continuing basis, and
(iii) the Trust Fund is not a regulated investment company as defined in Section
851(a) of the Code.                                                             

      General.  The  FASIT  provisions  of the Code  were  enacted  by the Small
Business Job Protection Act of 1996 and create a new elective  statutory vehicle
for the issuance of mortgage-backed  and asset-backed  securities.  Although the
FASIT  provisions of the Code became effective on September 1, 1997, no Treasury
regulations  or other  administrative  guidance have been issued with respect to
those  provisions.  Accordingly,  definitive  guidance  cannot be provided  with
respect to many aspects of the tax treatment of FASIT Securityholders. Investors
also should note that the FASIT discussion  contained herein  constitutes only a
summary of the federal income tax  consequences to holders of FASIT  Securities.
With  respect  to each  Series  of  FASIT  Securities,  the  related  Prospectus
Supplement will provide a detailed  discussion  regarding the federal income tax
consequences associated with the particular transaction.                        

      FASIT  Securities  will be classified as either FASIT Regular  Securities,
which  generally  will be treated as debt for federal  income tax  purposes,  or
FASIT  Ownership  Securities,  which  generally are not treated as debt for such
purposes, but rather as representing rights and responsibilities with respect to
the  taxable  income  or loss of the  related  Series of FASIT  Securities.  The
Prospectus Supplement for each Series of Securities will indicate whether one or
more FASIT  elections will be made for that Series and which  Securities of such
Series will be  designated  as Regular  Securities,  and which,  if any, will be
designated as Ownership Securities.                                             

      Asset  Composition.  In order for a Trust Fund (or one or more  designated
pools  of  assets  held  by a Trust  Fund)  to be  eligible  for  FASIT  status,
substantially  all of the assets of the Trust Fund (or the designated pool) must
consist of "permitted assets" as of the close of the third month beginning after
the closing date and at all times thereafter (the "FASIT  Qualification  Test").
Permitted  assets include (i) cash or cash  equivalents,  (ii) debt  instruments
with fixed terms that would  qualify as REMIC  regular  interests if issued by a
REMIC  (generally,  instruments  that  provide for  interest at a fixed rate,  a
qualifying variable rate, or a qualifying  interest-only ("IO") type rate, (iii)
foreclosure property, (iv) certain hedging instruments (generally,  interest and
currency  rate  swaps and  credit  enhancement  contracts)  that are  reasonably
required to guarantee or hedge against the FASIT's risks  associated  with being
the obligor on FASIT interests,  (v) contract rights to acquire  qualifying debt
instruments or qualifying hedging instruments, (vi) FASIT regular interests, and
(vii)  REMIC  regular  interests.  Permitted  assets  do not  include  any  debt
instruments  issued by the holder of the  FASIT's  ownership  interest or by any
person related to such holder.                                                  

      Interests in a FASIT.  In addition to the  foregoing  asset  qualification
requirements,  the interests in a FASIT also must meet certain requirements. All
of the interests in a FASIT must belong to either of the  following:  (i) one or
more classes of regular  interests or (ii) a single class of ownership  interest
that is held by a fully taxable  domestic C  corporation.  In the case of Series
that  include  FASIT  Ownership  Securities,  the  ownership  interest  will  be
represented by the FASIT Ownership Securities.                                  

      A FASIT interest  generally  qualifies as a regular  interest if (i) it is
designated as a regular interest, (ii) it has a stated maturity not greater than
thirty years, (iii) it entitles its holder to a specified principal amount, (iv)
the issue price of the  interest  does not exceed  125% of its stated  principal
amount,  (v) the yield to maturity of the  interest is less than the  applicable
Treasury  rate  published by the Service plus 5%, and (vi) if it pays  interest,
such  interest  is  payable  at  either  (a) a fixed  rate with  respect  to the
principal amount of the regular interest or (b) a permissible variable rate with
respect to such principal amount.  Permissible  variable rates for FASIT regular
interests  are the same as those  for REMIC  regular  interests  (i.e.,  certain
qualified  floating  rates and weighted  average  rates).  See "Certain  Federal
Income Tax  Consequences  -- REMIC Series -- Original  Issue  Discount"  and "--
Variable Rate Regular Certificates" herein.                                     

      If a FASIT Security fails to meet one or more of the  requirements set out
in clauses (iii), (iv), or (v), but otherwise meets the above  requirements,  it
may  still  qualify  as a  type  of  regular  interest  known  as a  "High-Yield
Interest." In addition,  if a FASIT  Security  fails to meet the  requirement of
clause (vi),  but the interest  payable on the Security  consists of a specified
portion of the interest  payments on permitted  assets and that portion does not
vary  over the  life of the  Security,  the  Security  also  will  qualify  as a
High-Yield  Interest.  A  High-Yield  Interest  may                             

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be held only by  domestic C  corporations  that are fully  subject to  corporate
income tax ("Eligible  Corporations"),  other FASITs,  and dealers in securities
who  acquire  such  interests  as  inventory,  rather  than for  investment.  In
addition,  holders  of  High-Yield  Interests  are  subject  to  limitations  on
offseting  income  derived from such interest.  See "Certain  Federal Income Tax
Consequences -- FASIT Securities -- Tax Treatment of FASIT Regular Securities --
Treatment of High-Yield Interests."                                             

      Consequences of Disqualification. If a Series of FASIT Securities fails to
comply  with one or more of the Code's  ongoing  requirements  for FASIT  status
during any taxable year, the Code provides that its FASIT status may be lost for
that year and  thereafter.  If FASIT status is lost, the treatment of the former
FASIT and the  interests  therein for federal  income tax purposes is uncertain.
The former FASIT might be treated as a grantor trust, as a separate  association
taxable as a  corporation,  or as a  partnership.  The FASIT Regular  Securities
could be treated as debt  instruments  for  federal  income tax  purposes  or as
equity interests. Although the Code authorizes the Treasury to issue regulations
that  address  situations  where a failure  to meet the  requirements  for FASIT
status occurs  inadvertently  and in good faith,  such  regulations have not yet
been issued. It is possible that disqualification relief might be accompanied by
sanctions,  such as the imposition of a corporate tax on all or a portion of the
FASIT's income for the period of time in which the requirements for FASIT status
are not satisfied.                                                              

      Tax Treatment of FASIT Regular Securities. Payments received by holders of
FASIT  Regular  Securities  generally  should be accorded the same tax treatment
under the Code as payments  received on other taxable corporate debt instruments
and on REMIC  Regular  Securities.  As in the case of holders  of REMIC  Regular
Securities,  holders of FASIT  Regular  Securities  must report income from such
Securities  under an accrual method of accounting,  even if they otherwise would
have used the cash  receipts  and  disbursements  method.  Except in the case of
FASIT Regular  Securities  issued with original  issue discount or acquired with
market discount or premium, interest paid or accrued on a FASIT Regular Security
generally  will be  treated  as  ordinary  income  to the  Securityholder  and a
principal payment on such Security will be treated as a return of capital to the
extent that the  Securityholder's  basis is  allocable  to that  payment.  FASIT
Regular  Securities  issued with original issue discount or acquired with market
discount or premium generally will treat interest and principal payments on such
Securities  in the same  manner  described  for REMIC  Regular  Securities.  See
"Certain  Federal  Income Tax  Consequences  -- REMIC  Series -- Original  Issue
Discount," "-- Market Discount," and "-- Amortizable Premium" above.  High-Yield
Securities  may be held only by fully  taxable  domestic C  corporations,  other
FASITs, and certain  securities  dealers.  Holders of High-Yield  Securities are
subject to  limitations  on their ability to use current losses or net operating
loss  carryforwards  or  carrybacks  to offset  any  income  derived  from those
Securities.                                                                     

      If a FASIT Regular  Security is sold,  the  Securityholder  generally will
recognize  gain or loss upon the sale in the  manner  described  above for REMIC
Regular Securities. See "Certain Federal Income Tax Consequences -- REMIC Series
-- Gain or Loss on Disposition."                                                

      FASIT  Regular  Securities  held by a REIT will  qualify  as "real  estate
assets" within the meaning of section  856(c)(5)(B) of the Code, and interest on
such Securities  will be considered  Qualifying REIT Interest to the same extent
that REMIC  Securities  would be so considered.  See "Certain Federal Income Tax
Consequences -- REMIC Series -- Tax Status of REMIC Certificates"  herein. FASIT
Regular  Securities held by a Thrift  Institution taxed as a "domestic  building
and loan  association"  will  represent  qualifying  assets for  purposes of the
qualification  requirements  set forth in Code Section  7701(a)(19)  to the same
extent that REMIC Securities would be so considered. See "Certain Federal Income
Tax  Consequences  -- REMIC --  Series  Tax  Status of REMIC  Certificates."  In
addition,  FASIT Regular  Securities  held by a financial  institution  to which
Section 585 of the Code applies will be treated as evidences of indebtedness for
purposes of Section  582(c)(1) of the Code. FASIT Securities will not qualify as
"Government securities" for either REIT or RIC qualification purposes.          

      Treatment of  High-Yield  Interests.  High-Yield  Interests are subject to
special rules regarding the  eligibility of holders of such  interests,  and the
ability of such holders to offset income  derived from their FASIT Security with
losses.  High-Yield Interests may be held only by Eligible  Corporations,  other
FASITs, and dealers in securities who acquire such interests as inventory.  If a
securities  dealer  (other than an Eligible  Corporation)  initially  acquires a
High-Yield  Interest as inventory,  but later begins to hold it for  investment,
the  dealer  will be  subject  to an  excise  tax equal to the  income  from the
High-Yield  Interest  multiplied  by the highest  corporate  income tax rate. In
addition,  transfers of  High-Yield  Interests to  disqualified  holders will be
disregarded  for federal income tax purposes,  and the transferor  still will be
treated as the holder of the High-Yield Interest.                               

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      The holder of a High-Yield  Interest may not use non-FASIT  current losses
or net operating loss  carryforwards  or carrybacks to offset any income derived
from the High-Yield Interest,  for either regular federal income tax purposes or
for alternative minimum tax purposes. In addition,  the FASIT provisions contain
an anti-abuse  rule that imposes  corporate  income tax on income derived from a
FASIT Regular Security that is held by a pass-through entity (other than another
FASIT)  that  issues  debt or equity  securities  backed  by the  FASIT  Regular
Security and that have the same features as High-Yield Interests.               

      Tax Treatment of FASIT Ownership  Securities.  A FASIT Ownership  Security
represents  the residual  equity  interest in a FASIT.  As such, the holder of a
FASIT  Ownership  Security  determines its taxable income by taking into account
all assets, liabilities,  and items of income, gain, deduction, loss, and credit
of a FASIT.  In general,  the  character  of the income to the holder of a FASIT
Ownership  Interest  will be the same as the  character  of such  income  to the
FASIT,  except that any  tax-exempt  interest  income  taken into account by the
holder  of a  FASIT  Ownership  Interest  is  treated  as  ordinary  income.  In
determining  taxable  income,  the  holder of a FASIT  Ownership  Security  must
determine the amount of interest,  original issue discount, market discount, and
premium  recognized  with  respect to the FASIT's  assets and the FASIT  Regular
Securities  issued by the FASIT  according to a constant yield  methodology  and
under an accrual method of accounting.  In addition,  holders of FASIT Ownership
Securities are subject to the same limitations on their ability to use losses to
offset  income  from their  FASIT  Security  as are the  holders  of  High-Yield
Interests.  See "Certain  Federal Income Tax Consequences -- FASIT Securities --
Tax Treatment of FASIT Regular Securities -- Treatment of High-Yield Interests."

      Rules  similar  to the  wash  sale  rules  applicable  to  REMIC  Residual
Securities also will apply to FASIT Ownership Securities. Accordingly, losses on
dispositions of a FASIT Ownership  Security  generally will be disallowed where,
within six months before or after the  disposition,  the seller of such Security
acquires any other FASIT  Ownership  Security or, in the case of a FASIT holding
mortgage  assets,  any interest in a Taxable Mortgage Pool, that is economically
comparable to a FASIT Ownership Security.  In addition,  if any security that is
sold or  contributed  to a FASIT by the holder of the  related  FASIT  Ownership
Security  was  required to be  marked-to-market  under Code  section 475 by such
holder, then section 475 will continue to apply to such securities,  except that
the amount  realized under the  mark-to-market  rules will be the greater of the
securities'  value under  present law or the  securities'  value after  applying
special  valuation  rules  contained  in the  FASIT  provisions.  Those  special
valuation rules generally  require that the value of debt  instruments  that are
not traded on an established  securities market be determined by calculating the
present value of the reasonably  expected  payments under the instrument using a
discount rate of 120% of the applicable Federal rate, compounded semiannually.  

      The holder of a FASIT Ownership Security will be subject to a tax equal to
100% of the net income derived by the FASIT from any "prohibited  transactions."
Prohibited  transactions  include (i) the receipt of income  derived from assets
that are not permitted  assets,  (ii) certain  dispositions of permitted assets,
(iii) the receipt of any income derived from any loan originated by a FASIT, and
(iv) in certain  cases,  the receipt of income  representing  a servicing fee or
other compensation. Any Series for which a FASIT election is made generally will
be structured in order to avoid application of the prohibited transaction tax.  

      Withholding,  Backup  Withholding,  Reporting  and Tax  Administration  to
Withholding and Backup Withholding.  Holders of FASIT Securities will be subject
to  withholding  and  backup  withholding  to the same  extent  holders of REMIC
Securities  would be subject.  See "Certain  Federal Income Tax  Consequences --
REMIC Series -- Backup Withholding" and "Certain Federal Income Tax Consequences
-- REMIC Series -- New Withholding  Regulations."  For purposes of reporting and
tax  administration,  holders of record of FASIT  Securities  generally  will be
treated in the same manner as holders of REMIC Securities.  See "Certain Federal
Income  Tax  Consequences  -- REMIC  Series --  Reporting  Requirements  and Tax
Administration" above.  Prospective investors should be aware than on October 6,
1997, the Treasury  Department  issued new  regulations  regarding  withholding,
backup  withholding,  and information  reporting.  Such  regulations are further
discussed at "Certain  Federal  Income Tax  Consequences  -- REMIC Series -- New
Withholding Regulations."                                                       

STATE AND LOCAL TAX CONSIDERATIONS

      No  advice  has been  received  as to local  income,  franchise,  personal
property, or other taxation in any state or locality, or as to the tax effect of
ownership  of  Certificates  in any state or  locality.  Certificateholders  are
advised to consult  their own tax  advisors  with  respect to any state or local
income,  franchise,  personal property, or other tax consequences arising out of
their ownership of Certificates.                                                

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 LEGAL INVESTMENT CONSIDERATIONS

      Unless otherwise specified in the applicable  Prospectus  Supplement,  any
Certificates  offered  hereby  that are rated in one of the two  highest  rating
categories by at least one nationally recognized statistical rating organization
will  constitute  "mortgage  related  securities"  for purposes of the Secondary
Mortgage  Market  Enhancement  Act of 1984 ("SMMEA") and, as such, will be legal
investments  for  persons,  trusts,  corporations,  partnerships,  associations,
business trusts and business entities (including depository  institutions,  life
insurance companies and pension funds) created pursuant to or existing under the
laws of the  United  States or of any state  whose  authorized  investments  are
subject  to state  regulation  to the same  extent  as,  under  applicable  law,
obligations  issued by or  guaranteed as to principal and interest by the United
States  or  any  such  entities.   Under  SMMEA,  certain  states  have  created
legislation  specifically  limiting the legal  investment  authority of any such
entities  with  respect to  "mortgage  related  securities,"  in which case such
Certificates  will constitute  legal  investments  for entities  subject to such
legislation only to the extent provided therein.  SMMEA provides,  however, that
in no event will the  enactment of any such  legislation  affect the validity of
any  contractual  commitment  to purchase,  hold or invest in  Certificates,  or
require  the  sale  or  other  disposition  of  Certificates,  so  long  as such
contractual  commitment was made or such Certificates were acquired prior to the
enactment of such legislation.                                                  

      SMMEA also amended the legal investment  authority of  federally-chartered
depository  institutions as follows:  federal savings and loan  associations and
federal  savings  banks may invest in, sell or  otherwise  deal in  Certificates
without  limitation as to the  percentage of their assets  represented  thereby;
federal  credit  unions  may  invest in  Certificates;  and  national  banks may
purchase  Certificates  for their own account  without regard to the limitations
generally  applicable  to  investment  securities  set  forth  in 12  U.S.C.  24
(Seventh),  subject in each case to such  regulations as the applicable  federal
regulatory authority may prescribe.                                             

      Some Classes of Certificates offered hereby may not be rated in one of the
two highest rating categories,  or may not otherwise satisfy the requirements of
SMMEA, and thus would not constitute  "mortgage related securities" for purposes
of SMMEA.                                                                       

      The  Federal  Financial  Institutions  Examination  Council,  The  Federal
Deposit Insurance Corporation,  the Office of Thrift Supervision,  the Office of
the  Comptroller  of the Currency and the National  Credit Union  Administration
have  proposed or adopted  guidelines  regarding  investment in various types of
mortgage-backed  securities.  In addition,  certain state  regulators have taken
positions that may prohibit regulated institutions subject to their jurisdiction
from holding securities  representing  residual interest,  including  securities
previously purchased.  There may be other restrictions on the ability of certain
investors, including depository institutions, either to purchase Certificates or
to purchase  Certificates  representing more than a specified  percentage of the
investor's  assets.  Investors  should  consult  their  own  legal  advisors  in
determining  whether  and to  what  extent  the  Certificates  constitute  legal
investments for such investors.                                                 

 RATINGS

      It is a condition  precedent to the issuance of any Class of  Certificates
sold  under  this  Prospectus  that  they be rated by at  least  one  nationally
recognized  statistical  rating  organization  in one of its four highest rating
categories  (within which there may be sub-categories  or gradations  indicating
relative  standing).  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  security  rating of any Series of  Certificates
should be evaluated  independently of similar security ratings assigned to other
kinds of securities.                                                            

      Ratings of the Certificates address the likelihood of the ultimate receipt
of all  distributions on the contracts by the related  certificateholders  under
the agreements  pursuant to which such certificates are issued. The ratings take
into  consideration  the credit quality of the related contract pool,  including
any credit support providers,  structural and legal aspects associated with such
certificates,  and the extent to which  payment  stream on such contract pool is
adequate to make  payments  required by such  certificates.  The ratings on such
certificates  do not,  however,  constitute a statement  regarding  frequency of
prepayments on the related contracts.                                           

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UNDERWRITING

      The  Company  may  sell   Certificates   of  each  Series  to  or  through
underwriters (the  "Underwriters") by a negotiated firm commitment  underwriting
and  public  reoffering  by the  Underwriters,  and  also  may  sell  and  place
Certificates directly to other purchasers or through agents. The Company intends
that Certificates will be offered through such various 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 Certificates  may be made
through a combination of such methods.                                          

      The  distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or at
market  prices  prevailing  at the  time of  sale,  at  prices  related  to such
prevailing market prices or at negotiated prices.                               

      In connection with the sale of the Certificates,  Underwriters may receive
compensation  from the Company or from purchasers of Certificates  for whom they
may  act as  agents  in the  form  of  discounts,  concessions  or  commissions.
Underwriters  may sell the  Certificates  of a Series to or through  dealers and
such dealers may receive  compensation in the form of discounts,  concessions or
commissions  from the  Underwriters  and/or  commissions from the purchasers for
whom they may act as agents.  Underwriters,  dealers and agents that participate
in the  distribution  of the  Certificates  of a  Series  may  be  deemed  to be
Underwriters, and any discounts or commissions received by them from the Company
and any  profit on the  resale of the  Certificates  by them may be deemed to be
underwriting  discounts and  commissions,  under the  Securities Act of 1933, as
amended (the "Act"). Any such Underwriters or agents will be identified, and any
such compensation received from the Company will be described, in the Prospectus
Supplement.                                                                     

      Under  agreements  which may be entered into by the Company,  Underwriters
and  agents who  participate  in the  distribution  of the  Certificates  may be
entitled  to  indemnification  by  the  Company  against  certain   liabilities,
concluding liabilities under the Act.                                           

      The Company may  authorize  Underwriters  or other  persons  acting as the
Company's  agents to solicit  offers by certain  institutions  to  purchase  the
Certificates  from the Company  pursuant to contracts  providing for payment and
delivery on a future date.  Institutions  with which such  contracts may be made
include  commercial  and savings  banks,  insurance  companies,  pension  funds,
investment companies, educational charitable institutions and others, but in all
cases such institutions  must be approved by the Company.  The obligation of any
purchaser  under any such  contract  will be subject to the  condition  that the
purchaser  of the  offered  Certificates  shall not at the time of  delivery  be
prohibited under the laws of the jurisdiction to which such purchaser is subject
from purchasing such  Certificates.  The Underwriters and such other agents will
not have  responsibility  in  respect of the  validity  or  performance  of such
contracts.                                                                      

      The Underwriters  may, from time to time, buy and sell  Certificates,  but
there can be no assurance that an active secondary market will develop and there
is no assurance that any such market, if established, will continue.            

      Certain  of  the   Underwriters   and  their   associates  may  engage  in
transactions with and perform services for the Company in the ordinary course of
business.                                                                       

 LEGAL MATTERS

      The  validity of the  Certificates  will be passed upon for the Company by
Boult,  Cummings,  Conners  &  Berry,  PLC.  The  material  federal  income  tax
consequences of the Certificates  will be passed upon for the Company by Brown &
Wood LLP, New York, New York.                                                   

 EXPERTS

      The consolidated  financial statements of CHI as of June 30, 1998 and 1999
and for each of the three years in the period ended June 30, 1999,  incorporated
by reference herein,  have been incorporated herein in reliance on the report of
PricewaterhouseCoopers  LLP, independent accountants,  given on the authority of
that firm as experts in accounting and auditing.                                

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GLOSSARY

      There follows abbreviated definitions of certain capitalized terms used in
this Prospectus and the Prospectus Supplement.  The Agreement may contain a more
complete  definition of certain of the terms defined herein and reference should
be made to the Agreement for a more complete definition of all such terms.      

      "Advances" means the advances made by a Servicer  (including from advances
made by a Sub-servicer) on any Remittance Date pursuant to an Agreement.        

      "Agreement"  means each Pooling and  Servicing  Agreement by and among the
Company,  the Trustee, the Servicer and any other party specified in the related
Prospectus Supplement.                                                          

      "APR" means, with respect to any Contract and any time, the per annum rate
of interest then being borne by such Contract, as set forth on the face thereof.

      "Available  Distribution  Amount"  means,  with  respect to each Series of
Certificates,  certain  amounts  on  deposit  in the  Certificate  Account  on a
Determination Date.                                                             

      "Certificate  Account" means the account maintained by the Servicer or the
Trustee, as specified in the related Prospectus Supplement.                     

      "Certificate  Distribution  Amount"  means  with  respect  to a Series  of
Certificates  evidencing  an interest in a Contract  Pool the amount of interest
(calculated  as  specified  in such  Prospectus  Supplement)  and the  amount of
Principal  (calculated  as  specified  in  such  Prospectus  Supplement)  to  be
distributed to Certificateholders on each Remittance Date.                      

      "Certificates"  means  the  Manufactured  Housing  Contract   Pass-Through
Certificates issued pursuant to an Agreement.                                   

"CHI" means Clayton Homes, Inc.                                     

      "Code"  means the  Internal  Revenue  Code of 1986,  as  amended,  and any
regulations promulgated thereunder.                                             

      "Company"  means  Vanderbilt  (as defined  below) or, if  specified in the
related  Prospectus   Supplement,   a  limited  purpose  finance  subsidiary  of
Vanderbilt organized and established by Vanderbilt.                             

      "Compound Interest  Certificates" means Certificates on which interest may
accrue  but not be paid  for the  period  described  in the  related  Prospectus
Supplement.                                                                     

      "Contract  Pool" means,  with respect to each Series of  Certificate,  the
pool of manufactured  housing  conditional  sales contracts and installment loan
agreements transferred by the Company to the Trustee.                           

      "Contract  Rate" means,  with respect to each Contract,  the interest rate
specified in the Contract.                                                      

      "Contracts"  means  manufactured   housing  installment  sales  contracts,
installment loan agreements and (unless the context requires otherwise) Mortgage
Loans,  including any and all rights to receive  payments due  thereunder on and
after the Cut-off  Date and  security  interest  in  Manufactured  Homes  and/or
mortgaged properties purchased with the proceeds of such contracts.             

      "Cut-off  Date"  means  the  date  specified  in  the  related  Prospectus
Supplement  as the date  from  which  principal  and  interest  payments  on the
Contracts are included in the Trust Fund.                                       

      "Determination  Date"  means,  unless  otherwise  specified in the related
Prospectus Supplement,  the third Business Day immediately preceding the related
Remittance Date.                                                                

      "Due Period"  means,  unless  otherwise  provided in a related  Prospectus
Supplement,  with respect to any Remittance  Date,  the period  beginning on the
26th day of the second  month  preceding  the month of the  Remittance  Date and
ending on the 25th day of the month preceding the month of the Remittance Date. 

      "Eligible  Investments" means one or more of the investments  specified in
the  Agreement  in which  moneys in the  Certificate  Account and certain  other
accounts are permitted to be invested.                                          

"FDIC" means the Federal Deposit Insurance Corporation.             

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"FHA" means the Federal Housing Administration.                     

      "Final  Scheduled  Remittance  Date"  means,  with  respect to a Series of
Certificates  providing for sequential  distributions in reduction of the Stated
Balance of the Classes of each Series,  the date,  based on the  assumptions set
forth in the related Prospectus  Supplement,  on which the Stated Balance of all
Certificates of each Class shall have been reduced to zero.                     

      "HUD" means the United States Department of Housing and Urban Development.

      "Interest Rate" means, with respect to a Series of Certificates  providing
for sequential  distributions  in reduction of the Stated Balance of the Classes
of such Series,  the interest  payable on the Principal  Balance  outstanding of
each such Class.                                                                

      "Liquidation  Proceeds" means cash (including insurance proceeds) received
in connection with the repossession of a Manufactured Home.                     

      "Loan-to-Value  Ratio"  means  the  loan-to-value  ratio  at the  time  of
origination of the Contract.                                                    

      "Manufactured  Home" means a unit of manufactured  housing,  including all
accessions  thereto,  securing the indebtedness of the Obligor under the related
Contract.                                                                       

      "Modular Home" means a unit of manufactured housing that does not meet the
requirements  of a  "manufactured  home" under 42 United  States  Code,  Section
5402(6), and which is further defined in a related Prospectus Supplement.       

      "Monthly  Payment"  means the scheduled  monthly  payment of principal and
interest on a Contract.                                                         

      "Obligor"  means each person who is  indebted  under a Contract or who has
acquired a Manufactured Home subject to a Contract.                             

      "Record  Date"  means  the  date  specified  in  the  related   Prospectus
Supplement for the list of  Certificateholders  entitled to distributions on the
Certificates.                                                                   

      "REMIC" means a "real estate  mortgage  investment  conduit" as defined in
the Code.                                                                       

      "Remittance  Date"  means the date  specified  in the  related  Prospectus
Supplement for payments on the Certificates.                                    

      "Remittance  Rate"  means,  as to a  Certificate,  the  rate or  rates  of
interest thereon specified in the related Prospectus Supplement.                

      "Seller"  means,  with  respect  to a Series  of  Certificates  evidencing
interest in Contracts, the Seller specified in the Prospectus Supplement.       

      "Senior  Certificates" means, with respect to each Series of Certificates,
the Class or Classes  which have  rights  senior to another  Class or Classes in
such Series.                                                                    

      "Servicer"  means  Vanderbilt  Mortgage and Finance,  Inc.,  or such other
entity as specified in the related Prospectus Supplement.                       

      "Servicing Fee" means the amount of the annual fee paid to the Servicer or
the Trustee as specified in the related Prospectus Supplement.                  

      "Single  Certificate" means, for each Class of Certificates of any Series,
the initial principal amount of Contracts  evidenced by a single  Certificate of
such Class.                                                                     

      "Stated Balance" means, with respect to a Series of Certificates providing
for  sequential  distributions  in reduction of Stated Balance of the Classes of
such Series,  the maximum specified dollars amount (exclusive of interest at the
related  Interest  Rate) to which the Holder  thereof is entitled  from the cash
flow of the Trust Fund.                                                         

      "Subordinated   Certificates"  means,  with  respect  to  each  Series  of
Certificates,  the Class or Classes with rights  subordinate to another Class or
Classes of such Series.                                                         

57

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      "Trust  Fund"  means,  with  respect to each Series of  Certificates,  the
corpus of the trust created by the related Agreement, to the extent described in
such  Agreement,  consisting of, among other things,  Contracts,  such assets as
shall from time to time be identified as deposited in the  Certificate  Account,
the Manufactured  Home which secured a Contract,  insurance,  a reserve fund and
other forms of credit enhancement, if any.                                      

      "Trustee" means the Trustee for a Series of Certificates  specified in the
related Prospectus Supplement.                                                  

"VA" means the Veterans' Administration.                            

"Vanderbilt" means Vanderbilt Mortgage and Finance, Inc.            

      "Variable Rate Regular Certificates" means Certificates which evidence the
right to receive distributions of income at a variable Remittance Rate.         

58

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$267,858,000

 (Approximate)

 Vanderbilt Mortgage and Finance, Inc.

 Seller and Servicer

 Manufactured Housing Contract

Senior/Subordinate Pass-Through Certificates, Series 1999D

----------------------------

 PROSPECTUS SUPPLEMENT

----------------------------

 Prudential Securities
Banc of America Securities LLC

      You should  rely only on the  information  contained  or  incorporated  by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information.                

      We are  not  offering  the  Series  1999D  Manufactured  Housing  Contract
Senior/Subordinate Pass-Through Certificates in any state where the offer is not
permitted.                                                                      

      We do not claim that the  information  in this  prospectus  supplement and
prospectus  is  accurate  as of any date  other  than the  dates  stated  on the
respective covers.                                                              

      Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters    of   the   Series   1999D    Manufactured    Housing    Contract
Senior/Subordinate  Pass-Through  Certificates  and with respect to their unsold
allotments or subscriptions.  In addition,  all dealers selling the Series 1999D
Manufactured Housing Contract Senior/Subordinate  Pass-Through Certificates will
be required to deliver a prospectus  supplement  and  prospectus for ninety days
following the date of this prospectus supplement.                               

 November 23, 1999

59

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘424B5’ Filing		Date		First		Last			Other Filings
		1/7/30		6
		12/15/29		5
		12/1/29		5
		11/7/29		35		49
		11/7/28		35		49
		11/7/27		35		49
		11/7/26		35		49
		11/7/25		35		49
		9/7/25		6
		11/7/24		35		49
		11/7/23		35		49
		11/7/22		35		49
		11/7/21		35		49
		11/7/20		35		49
		11/7/19		35		49
		11/7/18		35		49
		6/7/18		6
		11/7/17		35		49
		10/7/17		6
		9/7/17		6
		1/7/17		6
		11/7/16		35		49
		1/7/16		6
		11/7/15		35		49
		11/7/14		35		49
		11/7/13		35		49
		11/7/12		35		49
		8/7/12		6
		11/7/11		35		49
		11/7/10		35		49
		11/7/09		35		49
		11/7/08		35		49
		1/7/08		6
		11/7/07		35		49
		11/7/06		35		49
		11/7/05		35		49
		11/7/04		35		49
		11/7/03		35		49
		11/7/02		35		49
		11/7/01		35		49
		12/31/00		78					10-Q
		12/1/00		26
		11/7/00		35		49
		11/1/00		26
		10/1/00		26
		9/1/00		26
		8/1/00		26
		7/1/00		26
		6/1/00		26
		5/1/00		26
		4/1/00		16
		3/1/00		26
		2/1/00		26
		1/1/00		26		75
		12/31/99		135		138			10-Q
		12/7/99		1		4
		12/1/99		26
		11/30/99		4		43			8-K
Filed on:		11/24/99
		11/23/99		1		147			8-K
		11/1/99		1
		10/26/99		4		15
		9/30/99		28		90			10-Q
		6/30/99		28		143			10-K,  DEF 14A
		4/26/99		107		108
		3/31/99		90					10-Q
		6/30/98		28		143			10-K405
		5/28/98		27
		12/30/97		129
		10/6/97		78		141
		9/1/97		139
		8/5/97		136
		6/30/97		28					10-K
		6/8/97		137		138
		12/23/96		133
		8/20/96		78		134
		8/13/96		125
		6/11/96		128
		12/31/95		132					10-K,  10-Q
		11/1/95		132
		6/30/95		27					10-K
		1/4/95		133
		4/4/94		125
		12/23/92		122
		12/21/92		125
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