ITEM 2. PROPERTIES
The information required by item 2 is incorporated herein by reference to the Current Reports on Form 8-K filed with the Commission on January 16, 1998, February 13, 1998, March 17, 1998, April 15, 1998, May 15, 1998, June 15, 1998, July 15, 1998, August 13, 1998, September 15, 1998, October 16, 1998, November 16, 1998 and December 15, 1998 and to the Accountant's Report and the Annual Compliance Statement filed in response to Item 14 of this Form 10- K.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders to be voted on during the fourth quarter of 1998.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Registrant's 1,000 shares of authorized Common Stock are held by CRIIMI MAE Inc. (CRIIMI MAE), are not traded and have no trading market.
As of December 31, 1998 Collateralized Mortgage Obligations (Bonds), with a face value of $154,840,830 and a fair market value of $159,611,323, were outstanding. The Bonds are held by 23 Bondholders. The Bonds trade on the over-the-counter market.
Reference is made to the Current Reports on Form 8-K filed with the Commission on January 16, 1998, February 13, 1998, March 17, 1998, April 15, 1998, May 15, 1998, June 15, 1998, July 15, 1998, August 13, 1998, September 15, 1998, October 16, 1998, November 16, 1998 and December 15, 1998 for information concerning payments of principal and interest on the Bonds to Bondholders and dividends paid to CRIIMI MAE as the sole shareholder of the Registrant.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with management and others.
During 1998, CRIIMI MAE was paid $530,519 by the Registrant for interest expense due to CRIIMI MAE on the Mortgage Interest Strip Certificates that were issued in conjunction with the Bonds.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(c) Exhibits
Sequentially Exhibit No. Description Numbered Page ----------- ----------- -------------
4. Indenture, dated as of October 1, 1995, among CRIIMI MAE Financial Corporation and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 2 to the Current Report on Form 8-K filed with the Commission on October 24, 1995). --
10.1 Master Servicing Agreement, dated as of October 11, 1995, among CRIIMI MAE Financial Corporation, as Issuer, CRIIMI MAE Services Limited Partnership, as Master Servicer, State Street Bank and Trust Company, as Lead, and State Street Bank and Trust Company, as Trustee. (Incorporated by reference to Exhibit 3 to the Current Report on Form 8-K filed with the Commission on October 24, 1995). --
99.1 Report of Independent Public Accountants on Applying Agreed-upon procedures. (filed herewith). 8
99.2 Annual Report for 1998 (filed herewith). 12
99.3 Management's Assertion (filed herewith). 15
99.4 Annual Compliance Statement (filed herewith). 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
CRIIMI MAE FINANCIAL CORPORATION (Registrant)
March 22, 1999 /s/ William B. Dockser - ----------------- ----------------------------- DATE William B. Dockser Chairman of the Board and Principal Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
March 22, 1999 /s/ William B. Dockser - --------------------- ---------------------------- DATE William B. Dockser Chairman of the Board and Principal Executive Officer
March 22, 1999 /s/ H. William Willoughby - --------------------- ---------------------------- DATE H. William Willoughby Director, President and Secretary
March 22, 1999 /s/ Brian Hanson - --------------------- ---------------------------- DATE Brian Hanson Senior Vice President
March 22, 1999 /s/ Bruce Lane - --------------------- ---------------------------- DATE Bruce Lane Director
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
CRIIMI MAE Financial Corporation 11200 Rockville Pike Rockville, MD 20852
State Street Bank and Trust Company Two International Place Boston, MA 02110
We have performed the procedures enumerated below, which were agreed to by CRIIMI MAE Financial Corporation (the "Issuer") and State Street Bank and Trust Company (collectively, the "Specified Users"), solely to assist you in evaluating the Issuer's compliance, as set forth in the accompanying management assertion, with the Indenture agreement among CRIIMI MAE Financial Corporation as Issuer and State Street Bank and Trust Company as Trustee dated October 1, 1995 and the accuracy of the Issuer's records for the year ended December 31, 1998. This agreed-upon procedures engagement was performed in accordance with standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. However, it is our understanding that these procedures are sufficient for your purposes.
During our engagement, we were furnished with or referred to the following documents:
- - The Indenture agreement - - The Payment Date Statements for each of the months in the year beginning January 1, 1998 which represent all such Payment Date Statements for the year ended December 31, 1998, as provided by the Specified Users - - Collateral information attached to the Payment Date Statements listed above, as provided by the Specified Users - - The CRIIMI MAE Financial Corporation, 7% Collateralized Mortgage Obligations, Annual Report for 1998 (the "Annual Report") as attached to this letter
Procedures to Comply with Section 8.4(b) of the Indenture - ---------------------------------------------------------
We read such provisions of the Indenture agreement as we deemed necessary for purposes of this letter. We also read each of the Payment Date Statements for the months listed above and performed the following procedures:
1. We agreed the Scheduled Principal distributions for the Mortgages and the GNMAs as detailed in the Principal Distribution Detail table to the collateral information attached to the Payment Date Statement. We agreed the Principal Prepayments for the Mortgages and the GNMAs as detailed in the Principal Distribution Detail table to the collateral information attached to the Payment Date Statement. We verified with the Issuer that there were no FHA Insurance Proceeds or Realized Losses during the period covered by the Payment Date Statement. We also tested the clerical accuracy of the Net Principal Distribution.
2. For the Payment Date Statements listed above, we agreed the Beginning Balance as detailed in the Interest Payable on Bonds table to the Actual Ending Balance of the bonds detailed in the prior month's Payment Date Statement. We recalculated the Interest Payable based on the Beginning Balance and the Interest Rate on the Bonds of 7%.
We performed the calculations as set forth in this letter in accordance with Section 8.4(b) of the Indenture and found the calculations of the trustee to be in agreement with those recomputed by us within $2.00.
No exceptions were found as a result of applying the above procedures.
Procedures Related to the 1998 Annual Report - --------------------------------------------
1. We read the Annual Report.
2. We tested the Annual Report for mathematical accuracy.
3. We agreed the amounts disclosed for Scheduled Principal, Principal Prepayments, FHA Insurance Proceeds, Realized Losses and Net Principal Distribution as stated in the Principal Distribution Detail table of the Annual Report to the sum of the stated amounts as detailed in the Payment Date Statements.
4. We agreed the amounts disclosed for Interest Amount, Interest Strip Amount and Net Interest Distribution as stated in the Interest Distribution Detail table of the Annual Report to the sum of the stated amounts as detailed in the Payment Date Statements.
5. We agreed the amounts disclosed for the Beginning Balance, Interest Rate and Interest Payable as stated in the Interest Payable on the Bonds table of the Annual Report to amounts detailed in the applicable Payment Date Statement.
6. We agreed the Actual Beginning Balance, Actual Principal Payable and the Actual Ending Balance as stated in the Principal Balance of Collateral table of the Annual Report to the sum of the stated amounts as detailed in the Payment Date Statements.
7. We agreed the Beginning Balance, Principal Payable and the Ending Balance as detailed in the Principal Balance of Bonds table of the Annual Report to amounts detailed in the applicable Payment Date Statement.
8. We agreed the Number, Stated Principal Balance and Unpaid Principal Balance delinquent for One Month, Two Months, Three Months + and Foreclosures as detailed in the Delinquent Mortgage Loans table of the Annual Report to the stated amounts in the latest Payment Date Statement.
9. We agreed the Months Delinquent, Loan Number, Stated Principal Balance and Status of Foreclosures as detailed in the Delinquent Mortgage Loans Detail table of the Annual Report to the detail stated in the latest Payment Date Statement.
10. We agreed the Loan Number, Nature of Liquidation, Final Recovery Determination, FHA Proceeds and Realized Loss as detailed in the Liquidation table of the Annual Report to the detail stated in the latest Payment Date Statement.
11. We agreed the Aggregate P&I Advances, Aggregate unreimbursed P&I Advances, Interest on P&I Advances Paid to Master Servicer, Interest accrued on unreimbursed P&I Advances as stated in the P&I Advances table of the Annual Report to the stated amounts detailed in the latest Payment Date Statement.
12. We agreed the Aggregate Realized Losses incurred as stated in the Realized Losses table of the Annual Report to the stated amount in the latest Payment Date Statement.
13. We agreed the Master Servicing Fee and the Trustee Fee detailed in the Fees table of the Annual Report to the sum of the stated amounts disclosed in the Payment Date Statements.
We considered differences of less than $2.00 to be immaterial and, as such, are not reported as exceptions herein.
No exceptions were found as a result of applying the above procedures, except it is noted that in Step #3 above, that the prepayment amounts detailed in the Monthly Payment Date Statements includes the prepayment amount and the principal due for the month that the prepayment was made. The Annual Report's Principal Prepayments column includes only the prepayment amount. Accordingly, the Principal Payment and Principal Prepayment per the Monthly Payment Date
Statements amounts did not agree to such amounts in the Annual Report. However, we noted that the combined sum of all Principal Payment and Principal Prepayments per the Monthly Payment Date Statement agreed to the combined sum of the Principal Payment and Principal Prepayment amounts in the Annual Report.
We were not engaged to, and did not, perform an examination, the objective of which would be the expression of an opinion on management's assertion. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you.
This report is intended solely for the information and use of the specified users and is not intended to be and should not be used by anyone other than these specified parties.
Washington, D.C. March 22, 1999
CRIIMI MAE Financial Corporation 7.00% Collateralized Mortgage Obligations Annual Report for 1998
CRIIMI MAE Financial Corporation 7.00% Collateralized Mortgage Obligations Annual Report for 1998
CRIIMI MAE Financial Corporation 7.00% Collateralized Mortgage Obligations Annual Report for 1998
Other Information
P&I Advances
Aggregate P&I Advances $0.00 Aggregate unreimbursed P&I Advances $0.00 Interest on P&I Advances paid to Master Servicer $0.00 Interest accrued on unreimbursed P&I Advances $0.00
Realized Losses
Aggregate Realized Losses incurred $0.00
Fees
Master Trustee Servicing Fee Fee ------------- ---------
Mortgages $ 54,026.55 $ 9,724.78 GNMA $ 35,409.33 $ 6,373.67 Total $ 89,435.88 $16,098.45
MANAGEMENT'S ASSERTION
For the year ended December 31, 1998, the mathematical accuracy of CRIIMI MAE Financial Corporation's Payment Date Statements provided by State Street Bank and Trust Company as trustee is correct. CRIIMI MAE Financial Corporation's 1998 Annual Report is mathematically accurate and the amounts disclosed agree to the Payment Date Statements. Also, for the same period, CRIIMI MAE Financial Corporation has complied with the Indenture agreement among CRIIMI MAE Financial Corporation as Issuer and State Street Bank and Trust Company as Trustee dated October 1, 1995.
/s/ Brian Hanson -------------------------------- Brian Hanson Senior Vice President
/s/ H. Ilene Frank ----------------------------------- H. Ilene Frank Assistant Vice President/Controller
ANNUAL COMPLIANCE STATEMENT
March 31, 1999
Mr. William G. Swan State Street Bank and Trust Company 225 Franklin Street Boston, MA 02170
Dear Mr. Swan:
In accordance with Section 9.9 of the Indenture dated as of October 1, 1995, between CRIIMI MAE Financial Corporation as Issuer and State Street Bank and Trust Company as Trustee, I certify that review of the activities of the Issuer for the period January 1, 1998 to December 31, 1998 and of the Issuer's performance under this Indenture has been made under my supervision. To the best of my knowledge, based on such review, the Issuer has fulfilled all of its obligations under this Indenture.
Sincerely,
/s/ Brian Hanson ----------------------------------- By: Brian Hanson Senior Vice President