10-K 1 msdw02he1_10k.txt MSDW 02-HE1, DEC 31 2002, 10K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (Mark One) [ x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended DECEMBER 31, 2002 or [ ] Transition Report Pursuant to Section 13 or 15d of the Securities Exchange Act of 1934 For the transition period from _____________ to ________ Commission file Number 333-83986-04 Morgan Stanley Dean Witter Capital I Inc (Exact name of registrant as specified in its charter) Delaware 13-3291626 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1585 Broadway New York, New York 10036 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 212-296-7000 Morgan Stanley Dean Witter Capital I Inc Mortgage Pass-Through Certificates Series 2002-HE1 (Title of each class of securities covered by this Form) Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X - Yes No PART I Item 1. Business Not applicable. Item 2. Properties Not applicable on reliance of Relief Letters Item 3. Legal Proceedings There were no legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of the Security Holders. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder matters There is no established public trading market for the notes. Below are the number of Noteholders or Certificateholders of record as of the end of the reporting year. Morgan Stanley Dean Witter Capital I Inc Mortgage Pass-Through Certificates Series 2002-HE1 Class A-1 1 Series 2002-HE1 Class A-2 12 Series 2002-HE1 Class M-1 3 Series 2002-HE1 Class M-2 3 Series 2002-HE1 Class B-1 12 Series 2002-HE1 Class B-2 3 Series 2002-HE1 Class X 1 Series 2002-HE1 Class P 1 Item 6. Selected Financial Data. Not applicable. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Not applicable. Item 8. Financial Statements and Supplementary Data. Not applicable. Item 9. Changes in and Disagreements with Accountants on Accounting and Not applicable. PART III Item 10. Directors and Executive Officers of the Registrant Not applicable. Item 11. Executive Compensation Not applicable. Item 12. Security Ownership of Certain Beneficial Owners and Management Not applicable. Item 13. Certain Relationships and Related Transactions. Not applicable. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Not Applicable 2. Not Applicable 3. Exhibits 99.1 Annual Summary Statement 99.2 Annual Statement as to Compliance. 99.3 Annual Independent Public Accountant's Servicing Report. 99.4 Annual Report of Management (b) Reports on Form 8-K The registrant has filed Current Reports on Form 8-K with the Securities and Exchange Commission dated: July 25, 2002; August 26, 2002; September 25, 2002, October 25, 2002; November 25, 2002; December 26, 2002 (c) See (a) 3 above (d) Not Applicable SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Morgan Stanley Dean Witter Capital I Inc Mortgage Pass-Through Certificates Series 2002-HE1 /s/ Craig Phillips Name: Craig Phillips Title: President Date: March 31, 2003 Sarbanes-Oxley Certification CERTIFICATION Re: Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE1 ("the Trust"), Mortgage Pass-Through Certificates, Series 2002-HE1, issued pursuant to the Pooling and Servicing Agreement, dated as of June 1, 2002 (the "Pooling and Servicing Agreement"), among Morgan Stanley Dean Witter Capital I Inc., as depositor, U.S. Bank National Association, as trustee (the "Trustee"), Ocwen Federal Bank FSB, as servicer ("Ocwen"), The Provident Bank, as servicer ("Provident" and, together with Ocwen, the "Servicers") I, Craig Phillips, certify that: 1. I have reviewed this annual report on Form 10-K ("Annual Report"), and all reports on Form 8-K containing distribution reports (collectively with this Annual Report, the "Reports") filed in respect of periods included in the year covered by this Annual Report, of the Trust; 2. Based on my knowledge, the information in the Reports, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading as of the last day of the period covered by this Annual Report; 3. Based on my knowledge, the distribution or servicing information required to be provided to the Trustee by the Servicers under the Pooling and Servicing Agreement, for inclusion in the Reports is included in these Reports; 4. Based on my knowledge and upon the annual compliance statement included in this Annual Report and required to be delivered to the Trustee in accordance with the terms of the Pooling and Servicing Agreement, and except as disclosed in the Reports, each Servicer has fulfilled its obligations under the Pooling and Servicing Agreement; and 5. The Reports disclose all significant deficiencies relating to the Servicer's compliance with the minimum servicing standards based upon the report provided by an independent public accountant, after conducting a review in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as set forth in the Pooling and Servicing Agreement, that is included in the Reports. In giving the certifications above, I have reasonably relied on information provided to me by the following unaffiliated parties: the Trustee and each Servicer. Date: 3-25-03 Signature: /s/ Craig Phillips Title: President EXHIBIT INDEX Exhibit Number Description 99.1 Annual Summary Statement 99.2 Annual Statement of Compliance 99.3 Report of Independent Accountants 99.4 Report of Management EXHIBIT 99.1 -- Summary of Aggregate Amounts or End of Year Amounts for the period ending December 31, 2002 Morgan Stanley Dean Witter Capital I Inc Mortgage Pass-Through Certificates Series 2002-HE1 STATEMENT TO CERTIFICATEHOLDERS Class Cusip Orig Bal Beg Bal Prin Int A-1 61746WQK9 557,163,000 557,163,000 41,619,780 5,830,185 A-2 61746WPX2 237,977,000 237,977,000 20,693,123 2,435,622 M-1 61746WPY0 52,690,000 52,690,000 0 626,020 M-2 61746WPZ7 47,900,000 47,900,000 0 738,622 B-1 61746WQA1 38,320,000 38,320,000 0 687,762 B-2 61746WQB9 11,975,000 11,975,000 0 257,304 X N/A 11,975,000 11,975,000 20,534 27,953,416 P N/A 0 0 0 1,285,745 R N/A 0 0 0 0 958,000,000 958,000,000 62,333,437 39,814,675 Class Total Losses End Bal A-1 47,449,966 0 515,543,220 A-2 23,128,745 0 217,283,877 M-1 626,020 0 52,690,000 M-2 738,622 0 47,900,000 B-1 687,762 0 38,320,000 B-2 257,304 0 11,975,000 X 27,973,951 0 11,975,000 P 1,285,745 0 0 R 0 0 0 Total 102,148,113 0 895,687,097 AMOUNTS PER $1,000 UNIT Class Prin Int Total Losses End Bal A-1 74.6995 10.4641 85.1635 0.0000 925.3005 A-2 86.9543 10.2347 97.1890 0.0000 913.0457 M-1 0.0000 11.8812 11.8812 0.0000 1000.0000 M-2 0.0000 15.4201 15.4201 0.0000 1000.0000 B-1 0.0000 17.9479 17.9479 0.0000 1000.0000 B-2 0.0000 21.4867 21.4867 0.0000 1000.0000 X 1.7148 2334.3145 2336.0293 0.0000 1000.0000 Class Org Rate Cur Rate Next Rate A-1 2.20500% 1.74500% 1.78500% A-2 2.17000% 1.71000% 1.75000% M-1 2.44000% 1.98000% 2.02000% M-2 3.14000% 2.68000% 2.72000% B-1 3.64000% 3.18000% 3.22000% B-2 4.34000% 3.88000% 3.92000% X 6.37082% 6.12214% Section 4.02 (i.) PRINCIPAL DISTRIBUTIONS Curtails 374,426 Payments in Full 57,778,107 Liq Proceeds 454,459 58,606,992 Section 4.03 (ii.)(iii.) INTEREST DISTRIBUTIONS Unpaid Int Unpaid Int Basis Risk Class Int Included Remain Covered A-1 5,830,185 0 0 0 A-2 2,435,622 0 0 0 M-1 626,020 0 0 0 M-2 738,622 0 0 0 B-1 687,762 0 0 0 B-2 257,304 0 0 0 X 27,953,416 NA NA NA Total 38,528,930 0 0 0 Reduction from the allocation: Basis Risk Class Carry Forward Losses RAIS A-1 0 0 0 A-2 0 0 0 M-1 0 0 0 M-2 0 0 0 B-1 0 0 0 B-2 0 0 0 X 0 0 0 Total 0 0 0 Section 4.02 (v.) BALANCES AS OF: Dec - '02 Stated Prin Bal of Mort Loans 895,687,097 Section 4.02 (vi.) MAS SERV COMP 2,327,317 Section 4.02 (viii.) P&I ADVANCES * Current Period Advances 1,540,059 Outstanding Advances 2,289,648 Section 4.02 (ix.) Unpaid Stated DELINQ INFO Number Bal Bal *31-60 148 21,100,690 21,065,428 *61-90 35 5,111,096 5,100,186 *91+ 15 1,975,003 1,969,346 Foreclosures 149 19,539,099 19,479,657 Bankruptcies 58 6,228,689 6,215,768 REOs 6 738,264 735,489 *Note: Do not include Foreclosure, Bankruptcy, REO Section 4.03 (x.) SCHEDULED PAYMENTS Due Period Pmts Due 60+ Pmts Nov-02 7,269,218 259,985 Oct-02 7,397,979 223,071 Sep-02 7,472,101 154,929 Aug-02 7,535,962 83,657 Jul-02 7,590,413 40,704 Jun-02 7,213,841 3,481 Section 4.02 (xi.) REO INFORMATION Loans that became REO properties in the preceding calendar month: Loan Unpaid Bal Stated Bal 576444 198,000 197,156 Section 4.02 (xii.) REO INFORMATION Number of REO Loans 6 Stated Principal Balance of REO Properties 735,489 Tot Bk Val of REO Props: 749,940 Section 4.02 (xiii.) Stepdown Date Occurrence NO Trigger Event Occurrence NO Aggregate Balance of loans 60+ days delinquent * 33,500,446 *Note: Includes Foreclosure, Bankruptcy, REO Section 4.03 (xiv.) RESERVE FUND Amount on Deposit in Excess Reserve Fund 0 Section 4.03 (xv.), (xxi) REALIZED LOSSES Realized Losses that were incurred during the related Prepayment Period Total Realized Losses 2,003 Aggregate Realized Losses 2,003 Cummulative Realized Loss Percentage 0.0002% Applied Realized Losses that were incurred during the related Prepayment Period Total Applied Realized Losses 0 Aggregate Applied Realized Losses 0 Cummulative Applied Realized Loss Percentage 0.0000% Section 4.02 (xvi.) Net Monthly Excess Cash Flow 27,973,951 Allocation to Applied Realized Losses 0 Allocation to Unpaid Interest Amounts 0 Section 4.02 (xvii.) Subordination Amount 11,975,000 Required Subordinated Amount 11,975,000 Section 4.02 (xviii.) Prepay Charges 1,285,745 Section 4.03 (xix.), (xx) Grp 1 Grp 2 Pre-Funded Amounts 0 0 Unused Prefund Amts as prin to A 0 0 EXHIBIT 99.2 -- Servicer's Annual Statement of Compliance MORGAN STANLEY DEAN WITTER CAPITAL I, Inc. MORGAN PASS-THROUGH CERTIFICATES, SERIES 2002-HE1 SERVICER ANNUAL OFFICER'S CERTIFICATE FEBRUARY 24, 2003 Pursuant to the provisions of the Pooling and Servicing Agreement dated as of June 1, 2002 by and between MORGAN STANLEY DEAN WITTER CAPITAL I, INC. and PCFS MORTGAGE RESOURCES, a division of The Provident Bank, I, David M. Friedman as President of Servicing of the servicer, hereby certifies as follows: (a) a review of the activites of the Servicer during the preceding calender year and of the performance under the Pooling and Servicing Agreement has been made under my direction and supervision; and (b) to the best of my individual knowledge based on such review, the Servicer has fulfilled all of its obligations under the Pooling and Servicing Agreement for such year in accordance with the requirements set forth in said Pooling and Servicing Agreement. PCFS MORTGAGE RESOURCES By: /s/ David M. Friedman President of Servicing OCWEN CERTIFICATION Re: Morgan Stanley Dean Witter Capital I Inc. Trust 2002-HE1 (the "Trust"), Mortgage Pass-Through Certificates, Series 2002-HE1, issued pursuant to the Pooling and Servicing Agreement, dated as of June 1, 2002 (the "Pooling and Servicing Agreement"), among Morgan Stanley Dean Witter Capital I Inc., as depositor (the "Depositor"), U.S. Bank National Association, as trustee (the "Trustee"), Ocwen Federal Bank FSB, as servicer ("Servicer"), and the Provident Bank, as servicer I, Ronald M. Faris, certify to the Depositor and the Trustee, and their officers, directors and affiliates, and with the knowledge and intent that they will rely upon this certification that: 1. I am responsible for reviewing the activities performed by the Servicer under the Pooling and Servicing Agreement based upon my knowledge and the annual compliance review required under the Pooling and Servicing Agreement, and except as disclosed in the annual compliance statement required to be delivered to the Trustee in accordance with the terms of the Pooling and Servicing Agreement (which has been so delivered to the Trustee), the Servicer has fulfilled its obligations under the Pooling and Servicing Agreement; and 2. All significant deficiencies relating to the Servicer's compliance with the minimum servicing standards for purposes of the report provided by an independent public accountant, after conducting a review conducted in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar procedure, as set forth in the Pooling and Servicing Agreement, have been disclosed to such accountant and are included in such reports. Date: March 14, 2003 /s/ Ronald M. Faris Ronald M. Faris President EXHIBIT 99.3 -- Report of Independent Auditors Report of Independent Accountants Board of Directors The Provident Bank We have examined management's assertion, included in the accompanying report titled Report of Management, that the Provident Bank (the Bank) complied with the minimum servicing standards set forth in the Mortgage Bankers Association of America's Uniform Single Attestation Program for Mortgage Bankers (USAP) during the year ended December 31, 2002. Management is responsible for the Bank's compliance with those requirements. Our responsibility is to express an opinion on management's assertions about the Bank's compliance based on our examination. Our examination was made in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Bank's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Bank's compliance with specified requirements. In our opinion, management's assertion, that the Bank complied with the aforementioned requirements during the year ended December 31, 2002, is fairly stated, in all material respects. This report is intended solely for the information and use of the board of directors, management, Federal Home Loan Mortgage Corporations, and the Bank's private investors and is not intended to be and should not be used by anyone other than these specified parties. /s/ Ernst & Young LLP February 24, 2003 PricewaterhouseCoopers LLP 222 Lakeview Avenue Suite 360 West Palm Beach, FL 33401 Telephone (561) 832 0038 Facsimile (561) 805 8181 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT To the Board of Directors of Ocwen Federal Bank FSB We have examined management's assertion, included in the accompanying Management Assertion on Compliance with USAP, that, except for the noncompliance related to interest on escrows described in the third paragraph, Ocwen Federal Bank FSB (the "Bank") complied with the minimum servicing standards identified in the Mortgage Bankers Association of America's ("MBA's") Uniform Single Attestation Program for Mortgage Bankers ("USAP") as of and for the year ended December 31, 2002. Management is responsible for the Bank's compliance with those minimum servicing standards. Our responsibility is to express an opinion on management's assertion about the Bank's compliance based on our examination. Our examination was made in accordance with standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the Bank's compliance with the minimum servicing standards and performing such other procedures as we consider necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the Bank's compliance with the minimum servicing standards. Our examination disclosed noncompliance with minimum servicing standards in certain states related to interest on escrows applicable to the Bank during the year ended December 31, 2002. Such noncompliance is described in the accompanying Management Assertion on Compliance with USAP. In our opinion, management's assertion that the Bank complied with the aforementioned minimum servicing standards, except for noncompliance as described in the accompanying Management Assertion on Compliance with USAP, as of and for the year ended December 31, 2002 is fairly stated, in all material respects. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP March 14, 2003 EXHIBIT 99.4 -- Report of Management Report of Management We, as members of management of PCFS Mortgage Resources' (based in Atlanta)(PCFS), a division of The Provident Bank (the Bank), are responsible for complying with the minimum servicing standards as set forth in the Mortgage Bankers Association of America's Uniform Single Attestation Program for Mortgage Bankers (USAP). We are also responsible for establishing and maintaining effective internal control over compliance with these standards. We have performed an evaluation of the PCFS's compliance with the minimum servicing standards as set forth in the USAP as of December 31, 2002 and for the year then ended. Based on this evaluation, we assert that during the year ended December 31, 2002, the PCFS complied, in all material respects, with the minimum servicing standards set forth in the USAP. As of and for this same period, PFGI had in effect a fidelity bond and errors and omissions policy in the amount of $25,000,000 and $20,000,000, respectively. /s/ Richard Gravino /s/ David Friedman Richard Gravino David Friedman Executive Vice President Senior Vice President Consumer Finance National Servicing Operations MANAGEMENT ASSERTION ON COMPLIANCE WITH USAP March 14, 2003 As of and for the year ended December 31, 2002, except as specifically noted below, Ocwen Federal Bank FSB (the "Bank") has complied in all material respects with the minimum servicing standards set forth in the Mortgage Bankers Association of America's ("MBA's") Uniform Single Attestation Program for Mortgage Bankers ("USAP"). Standard: Interest on escrow accounts shall be paid, or credited, to mortgagors in accordance with the applicable state laws. Interest on escrow accounts in certain states was not paid, or credited, to mortgagors in accordance with the applicable state laws during the year ended December 31, 2002. The Bank is currently implementing an enhancement to its REALServicing servicing system to ensure that, for loans collateralized by properties located in states that require the payment of interest on escrow accounts, the payment or crediting of such interest is in accordance with applicable state laws. As of and for this same period, the Bank had in effect a fideltiy bond in the amount of $15,000,000 and an errors and omissions policy in the amount of $10,000,000. /s/ Ronald M. Faris Ronald M. Faris President /s/ Scott W. Anderson Scott W. Anderson Senior Vice President of Residential Assets /s/ James D. Campbell James D. Campbell Director of Investor Reporting