S&P Rates Vanderbilt Mortgage & Fin Pass-Thru Certs

Business Wire, August 31, 1998

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/31/98--Standard & Poor's assigned its ratings to Vanderbilt Mortgage & Finance Inc.'s $244.2 million manufactured housing contract senior subordinate pass-through certificates series 1998-C as follows: -0-

ISSUE               DOLLAR AMOUNT       RATING    COUPON RATE

Class I A-1         $36.800 million     AAA       LIBOR(a) + 0.04%
Class I A-2         $38.300 million     AAA       6.06
Class I A-3         $21.800 million     AAA       6.16%
Class I A-4         $15.200 million     AAA       6.32%
Class I A-5         $20.539 million     AAA       6.51%
Class I A-6         $13.020 million     AA-       6.75%
Class I M-1         $ 3.662 million     A         6.90%
Class I B-1         $ 6.104 million     BBB       6.97%
Class I B-2         $ 7.324 million     BBB       7.73%

Class II A-1        $ 61.502 million    AAA       LIBOR(a) + 0.18%
Class II B-1        $  9.572 million    AA-       LIBOR(a) + 0.34
Class II B-2 $  4.277 million    BBB       LIBOR(a) + 0.97%
Class II B-3        $  6.110 million    BBB       LIBOR(a) + 1.30%

The assigned ratings are based on the credit support available to the certificates, analysis of Vanderbilt's manufactured housing receivables portfolio, and a sound legal structure.

The transaction structure is a REMIC trust with multiple-rated tranches. The class I certificates are supported by fixed-rate, fully amortizing manufactured housing sales contracts. The class II certificates are supported by adjustable rate, fully amortizing sales contracts. Although each class has it's own priority of payments, the excess spread of each class is cross-collateralized with the other to the extent it is available after payment of principal and interest. Credit support available to certificateholders is comprised of subordination, overcollateralization, a limited corporate guarantee, and excess spread. Subordination is available to class I A-1 through B-1 and class II A-1 through B-2.

The triple-'A' rated classes benefit from increasing subordination due to a principal lockout period. Subordinate classes may receive principal payments after five years and subject to performance tests. Overcollateralization is available to class II certificateholders which builds from 0% to 3.75% of initial pool balance and amortizes to 7.50% of current pool balance subject to a floor of 0.75% of initial pool balance. The limited guarantee of Clayton Homes Inc. (the parent company of Vanderbilt Mortgage and Finance) is available to class I B-2 and class II B-3 certificateholders. Excess spread is supplemented by the subordination of the servicing fee in the priority of payments below principal and interest payments.

Additional liquidity support to meet current interest payments is available to certificateholders of the class I A-6 through B-1 and class II B-1 and B-2 certificates. To the extent the transaction needs additional funds to meet its interest distribution requirements on the aforementioned classes the transaction may access funds which have been collected subsequent to the most recent due period cutoff but prior to distributions to certificateholders for the applicable due period. Access to subsequent month's collections are subject to performance tests.

The 1998-C manufactured housing sales contracts consist of both fixed rate (Group I) and adjustable rate (Group II) contracts. The class I certificates are supported by the Group I contracts and the class II certificates are supported by the Group II contracts. The Group I contracts consist of 65.0% new homes and 35.0% used homes. The weighted APR of the Group I contracts as of the cutoff date is 10.63%. The original term to maturity of the Group I contracts is 232 months and the remaining term to maturity is 231 months. The average outstanding principal balance of the Group I contracts is $34,444 and the weighted average original loan-to-value is 84.5%.

Contracts originated by 21st Century Mortgage Corp. and purchased by Vanderbilt comprise 34.2% of the Group I contracts. The Group II contracts consist of 77.2% new homes and 22.8% used homes. The Group II contracts are indexed to the five-year CMT rate with an annual cap of 2% and a lifetime cap of 6%. The weighted average APR of the Group II contracts as of the cutoff date is 10.27%.The original term to maturity of the Group II contracts is 214 months and the remaining term to maturity is 213 months. The average outstanding principal balance of the Group II contracts is $35,173 and the weighted average original LTV is 87.2%. All of the Group II contracts were originated by Vanderbilt.

Vanderbilt is an indirect subsidiary of Clayton Homes Inc. (triple-'B'/Stable/--). Vanderbilt originates, purchases, sells and services installment sales contracts and installment loan agreements for manufactured housing and modular housing. Clayton Homes manufactures and sells manufactured and modular homes, and owns, manages, and markets manufactured housing communities. Vanderbilt purchases installment sales contracts from sales centers in 29 states. The majority of the sales centers are Clayton Homes sales centers and the remainder are independent. Additionally, Vanderbilt purchases a large number of contracts originated by 21st Century Mortgage.