EXECUTION
GE CAPITAL MORTGAGE SERVICES, INC.
REMIC MULTI-CLASS PASS-THROUGH CERTIFICATES
SERIES 1996-HE3
TERMS AGREEMENT
(to Underwriting Agreement,
dated September 24, 1996
between the Company and the Underwriters)
GE Capital Mortgage Services, Inc. New York, New York
Three Executive Campus September 24, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
PaineWebber Incorporated (the "Underwriter") agrees,
subject to the terms and provisions herein and of the captioned
Underwriting Agreement (the "Underwriting Agreement"), to
purchase the Classes of Series 1996-HE3 Certificates specified in
Section 3 hereof (the "Offered Certificates"). This Terms
Agreement supplements and modifies the Underwriting Agreement
solely as it relates to the purchase and sale of the Offered
Certificates described below. The Series 1996-HE3 Certificates
are registered with the Securities and Exchange Commission by
means of an effective Registration Statement (No. 333-3038).
Capitalized terms used and not defined herein have the meanings
given them in the Underwriting Agreement.
Section 1. The Mortgage Pool: The Series 1996-HE3
Certificates shall evidence the entire beneficial ownership
interest in a mortgage pool (the "Mortgage Pool") of closed end,
fixed rate, first- or second-lien, home equity mortgage loans
(the "Mortgage Loans") having the characteristics described in
the Final Prospectus.
Section 2. The Certificates: The Offered Certificates
shall be issued as follows:
(a) Classes: The Offered Certificates shall be issued
with the following Class designations, interest rates and
principal balances subject in the aggregate to a variance
described in the Final Prospectus:
Principal Interest Class Purchase
Class Balance Rate Price Percentage
Class M $2,762,943 (1) 99.8340%
Class B1 2,939,302 (1) 97.6809
Class B2 999,364 (1) 92.8269
Class R1 500 0.00 (2)
Class R2 500 0.00 (2)
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(1) Interest will accrue on the Class M, Class B1 and Class B2
Certificates during the initial Interest Accrual Period (as
defined in the Prospectus Supplement) at Certificate
Interest Rates of 8.250%, 8.250% and 8.250% per annum,
respectively, and during each subsequent Interest Accrual
Period at Certificate Interest Rates equal to the lesser of
(i) 8.250%, 8.250% and 8.250% per annum, respectively, and
(ii) the Weighted Average Net Mortgage Rate (as defined in
the Prospectus Supplement) of the Mortgage Loans as of the
first day of the related Interest Accrual Period.
(2) The aggregate Purchase Price of the Offered Certificates
will be reduced, in respect of the Class R1 and Class R2
Certificates, by an amount equal to approximately $48,500.
(b) The Offered Certificates shall have such other
characteristics as described in the Final Prospectus.
Section 3. Purchase Price: The Purchase Price for each
Class of the Offered Certificates shall be the Class Purchase
Price Percentage therefor (as set forth in Section 2(a) above) of
the initial Class Certificate Principal Balance thereof plus
accrued interest at the applicable interest rate per annum of
each such Class from and including September 1, 1996, up to, but
not including, September 27, 1996 (the "Closing Date") as reduced
in the aggregate by $48,500 in respect of the Class R1 and Class
R2 Certificates.
Section 4. Required Ratings: The Class M, Class B1,
Class B2, Class R1 and Class R2 Certificates shall have received
Required Ratings of at least "Aa2", "A2", "Baa2", "Aaa" and
"Aaa", respectively, from ▇▇▇▇▇'▇ Investors Service. The Class R1
and Class R2 Certificates shall have received a Required Rating
of "AAA" and "AAA", respectively, from Fitch Investors Service,
L.P.
Section 5. Tax Treatment: One or more elections will
be made to treat the assets of the Trust Fund as a REMIC (other
than assets excluded from a REMIC as described in the Final
Prospectus.
2
Section 6: Underwriter-Provided Information: The
Company acknowledges that the statements set forth in the third
paragraph under the caption "Plan of Distribution" in the Final
Prospectus as such statements relate to the Offered Certificates
constitute the only information furnished in writing by or on
behalf of PaineWebber for inclusion in such Final Prospectus, and
PaineWebber confirms that such statements are correct.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to the
undersigned a counterpart hereof, whereupon this letter and your
acceptance shall represent a binding agreement between the
Underwriters and the Company.
Very truly yours,
PAINEWEBBER INCORPORATED
By:________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of
the date hereof.
GE CAPITAL MORTGAGE SERVICES, INC.
By:______________________________
Name:
Title: