Ratings

The following table shows the key statistics of GMACCM UK's portfolio.

Key Statistics
Portfolio size	April 2001	March 2002
Value of properties (£ 000s)	307,261	307,795
Number of properties	576	394
Delinquency (percentage of UPB's outstandings)
30 days +	9.8	2.4
60 days +	0.9	0.9

The administrative offices of GMACCM (Europe) are based in Mullingar, Ireland, while the client relationship staff are based in Sutton, Surrey, England. The administrative operation was established in February 2000 (with support from Ireland's Investment and Development Agency), and serves as the central loan administration platform for Europe.

While establishing its own portfolios, GMACCH has been (and continues to) leverage the skills of the staff to assist with a variety of loan administration functions for its U.S. portfolios. At the same time, the operation has been modifying its systems to enable it to handle the varied structures of U.K. loans.

The European primary servicing operation is headed by Clare Dooley, who, with more than 18 years industry experience, has been with GMACCH for seven years. She moved into her current position two and a half years ago to set up the European operation. Her two direct reports, Jim O'Leary (servicing operations) and Gerard Nation (servicing initiatives/database management) have 22 years and 11 years industry experience, respectively. The remaining management team has an average of some eight years experience each.

This experienced management team is supported by a well-educated workforce of 97 staff. The company's demographics research indicates that its Irish location should be able to meet additional employment needs from a well-educated labor pool of modest cost. More than 20% of the workforce in the area is also bilingual.

GMACCM UK, primary servicing division, has four staff based in the U.K., with an average of nine years company experience each (including their time at UCB Healthcare) and 19 years industry experience in total. They have a customer services role via two geographically based portfolio managers. Their knowledge of the portfolio is reflected in their extensive experience with the company. Each portfolio manager has more than 200 assets to manage. Standard & Poor's considers this to be nudging the upper end of the scale for them to give satisfactory attention to clients.

In the most recent staff survey (January 2002), the team indicated its general satisfaction with both the organization and its supervision. Some 74% responded that their morale was good or above, 81% gave the same ranking for their immediate supervision, and 77% agreed that the company listened to what they had to say.

GMACCM (Europe) strongly promotes formalized, job-oriented training for all staff. The company's human resources staff (in conjunction with human resources and training personnel at the U.S. headquarters) schedule, manage, and track the training activities.

Training encompasses on-the-job mentoring along with classroom sessions for both new and seasoned employees scheduled throughout the year. New employees participate in a four-day orientation regimen that focuses on technology and job-related classroom instruction.

All employees must participate in the company's three-tiered training process. Levels I and II training (which involves videoconferencing with headquarters) stresses workflow relationships among departments together with functional accountability. Level III training, which occurs at the Ireland office in a classroom setting, stresses specific policies, procedures, and exercises to expand employee skills and foster career advancement.

Each new employee must also complete two Mortgage Bankers Assoc. courses covering mortgage banking and commercial mortgage servicing. For 2002, GMACCM (Europe) has mandated that each employee complete a minimum of four training programs as part of their performance evaluations. In addition, the company operates a tuition reimbursement scheme for external courses, which are of benefit to both itself and the employee; this has been taken up by more than 10% of employees.

GMACCM (Europe) demonstrates excellent internal controls through its procedures and audit process. The company has developed well-documented operating policies and procedures that address its varying servicing responsibilities across GMACCH's multinational portfolios. All policies and procedures are available electronically. GMACCM (Europe)'s operating controls are tested through a well-designed internal audit function. An independent department, GM audit services, performs audits of operational controls using a comprehensive risk assessment matrix and thorough testing procedures. In the most recent audit (November 2001), the servicing platform achieved the highest ranking given by GM audit services.

GMACCM (Europe)'s technology environment provides a highly automated servicing environment using an integrated array of systems. The principal application for core loan processing is the McCracken Strategy system (version 12A) operating on an IBM AS/400. A data mirroring process is used to convert data from the McCracken system into a format that is easier to use with relational database applications. One such application, "STR", is then used to feed a number of reporting systems, including "GEMS", which is a client/server application accessible via a Web browser (subject to the necessary identity and password control).

GMACCM (Europe) operates a near paperless office, using a document management and workflow system (OnBase, Enterprise IDM), into which all new loan documents and ongoing correspondence are imaged and made available to loan administrators at their desks, as well as to GMACCM UK staff.

Workstations operate within a client/server architecture running on Windows NT, and these are connected through a LAN and WAN by Frame Relay architecture to the Sutton office and corporate headquarters in Horsham, Pennsylvania. Other software applications used include a system that automates the reconciliation of bank accounts and one that enables GMACCM (Europe) to format electronic files from previous servicers so it can upload them directly onto the McCracken system.

The back-up and security arrangements in place are considered to be satisfactory, and Mullingar has a battery back-up uninterrupted power supply of eight hours. Both the Mullingar and Sutton offices have disaster recovery plans and both were tested in late 2001: both have third-party recovery sites, the former with Oman and the latter with Guardian IT.

GMACCM (Europe)'s database management department oversees a tightly controlled new loan set-up function to ensure data integrity and adherence to key loan task requirements. The process includes at least two levels of data review with supervisory approvals, document-to-system checks, and system-generated edit reports to identify input errors.

An acquisitions manager and a quality control officer in the servicing initiatives department also help ensure the timely and accurate flow of data to the company's systems during portfolio acquisitions. GMACCM (Europe) has developed specific control procedures to ensure accuracy with system records and billings for adjustable rate mortgage loans. An administrator from the servicing accounting department also reviews loan set-up data against the loan document for added control.

Through its systems and procedures, the company has the ability to perform whole-portfolio conversions in an electronic manner in addition to single loan acquisitions. As part of the set-up process, the company issues system-generated welcome letters to borrowers and ensures that new files and documents are imaged to help future access. Finally, for each new investor portfolio assignment, the company creates an abstract of the servicing agreement for on-line reference. Once imaged, all-important documentation is stored off-site in a secure, fireproof third-party warehouse.

GMACCM (Europe) demonstrates efficient procedures for processing borrower payments and handling the corresponding accounting and reporting functions. The company's servicing accounting department works closely with its counterpart at GMACCM headquarters in Horsham in the U.S.

Because most U.K. borrowers pay through automatic account debits from their bank accounts, the servicing accounting operation rarely handles checks or processes cash on-site. To enable them to do this they are authorized users of the BACS (banks automated collection system), which carries out its own vetting and approval system. The payment posting process is automated and integrated with the servicing system in which banking software is used to record payment transactions on the system through batch processing. The company's procedures call for supervisory and manager approval for all key steps in the loan accounting and reporting process flow. Dedicated staff for bank account reconciliations, investor reporting, and investor remittance functions provide for an appropriate segregation of duties to promote sound internal controls. As needed, the company can produce a complete body of Commercial Mortgage Securities Assoc. (CMSA) compliant reports through direct download from the servicing system and supplemental applications.

As noted, the monthly bank account reconciliation process is fully automated through the use of a purchased bank software application. This accounts for about 80% of transactions, with the remaining 20% being investigated and subsequent entries passed on a dual control basis.

Because the central servicing platform handles U.S. as well as non-U.S. loans, GMACCM (Europe) has trained its staff to handle procedures relating to real estate tax, insurance, and reserve account activity as applicable to the requirements of each country-specific portfolio. The company's procedures indicate that it has properly researched the varying servicing nuances of these functions across its portfolios. The department includes a dedicated team for tax administration, one team for insurance, and one for escrow analysis. All key loan details and tracking activities for these functions are managed through the servicing system.

For insurance, procedures call for the monitoring of carrier ratings and coverage adequacy at the time of every policy renewal. Borrowers receive reminder notices 30 days before policy expirations. The company should, however, consider sending the first reminder notice 60 days in advance to be more proactive. While the company generates many exception letters relating to insufficient insurance documentation directly from the servicing system, it is still working to reduce the need for creating manual letters for certain exceptions. Should a loan require "force placed" coverage, the servicing staff work with the force placement administrator at the Horsham office (at the publication of this report the carrier was Great American Insurance Co.; 'A/Negative/--').

The U.K. portfolio is covered by a "Sleep Easy" policy. This covers the lender for the amount owing against the property in the case of the lender's policy lapsing, which, because it does not cover the full value of the property, acts as a disincentive to borrowers who do not keep up their own insurance. GMACCM UK is in the process of arranging a forced cover policy for any further assets it acquires in the U.K.

GMACCM (Europe) has sound controls for handling reserve account activity. A dedicated reserve administration unit oversees reserve account disbursement requests and completion activity documentation. The company's client relations manager acts as a liaison with the borrower to ensure that the borrower submits appropriate documentation for reserve account requests. The unit works closely with the company's property inspection unit and outside consultants as needed to make disbursement decisions, which also require management approval. The servicing system tracks the status of all reserve activity including a monthly report showing the expiration of completion repair agreements for the upcoming six-month period.

GMACCM (Europe)'s collateral administration department demonstrates sound and proactive procedures for asset administration functions. The department tracks and analyzes loan collateral financial statements, coordinates inspections, and oversees loan watchlist and risk rating recommendations. The department includes a manager, four teams headed up by senior analysts, and another team for property inspections. One of these teams focuses exclusively on its European portfolio. The company has developed proactive procedures and watchlist parameters regarding the collection and review of borrower operating statements and inspection reports. Net operating income and debt coverage ratios and trends are kept on the servicing system along with analysts' comments.

The frequency of property inspections is based on loan size thresholds in which the majority of GMACCM (Europe)'s portfolio should undergo inspections at least every 24 months with the largest loans inspected annually. Standard & Poor's still encourages the company to inspect as many properties as possible on an annual basis to help identify potential problems that could affect the loan. Standard & Poor's considers that GMACCM (Europe)'s use of a risk rating system in addition to an ongoing watchlist process provides an added tool to monitor credit quality and portfolio performance. The company has procedures that include specific collection guidelines and proactive timeframes for initiating and tracking borrower communication through telephone and written contact during the first 30-60 days before transfer of the asset to an affiliated or third-party special servicer. A special servicing operation based at the office in Sutton, England was established to service loans in arrears and complete collateral monitoring, collections, and workout activities as needed.

The U.K. portfolio contains a number of "endowment mortgages", loans on which no capital is repaid until the end of the loan period, at which time an endowment assurance policy matures and repays the capital balance. GMACCM (Europe) has a notice of interest on these policies and tracks any notification of premium lapses with the necessary corrective action. Standard & Poor's considers that they should also have a process in place to surrender the policy (offsetting its value against the capital outstanding) and change the resulting balance to a capital and interest repayment mortgage.