later  periods.  Accordingly,  a  Holder  of  the  Class  RR  Securities  may  experience  substantial adverse  tax  timing  consequences.  Prospective  investors  are  urged  to  consult  their  own  tax advisors  and  consider  the  after-tax  effect  of  ownership  of  the  Residual  Securities  and  the suitability of the Residual Securities to their investment objectives. Prospective Holders of Residual Securities should be aware that, at issuance, based on the expected  prices  of  the  Regular  and  Residual  Securities  and  the  prepayment  assumption described above, the residual interests represented by the Residual Securities will be treated as "noneconomic residual interests" as that term is defined in Treasury regulations. OID accruals on the Underlying Certificates will be computed using the same prepayment assumption as set forth under "Certain Federal Income Tax Consequences – Regular Securi- ties" in this Supplement. Regulations were recently finalized regarding the federal income tax treatment of "induce- ment  fees"  received  by  transferees  of  noneconomic  REMIC  residual  interests.  The  final regulations (i) provide tax accounting rules for the treatment of such fees as income over an appropriate period and (ii) clarify that inducement fees will be treated as income from sources within the United States. The rules set forth in the final regulations apply to taxable years ending on or after May 11, 2004. Prospective purchasers of the Class RR  Securities should consult with their tax advisors regarding the effect of these final regulations. MX Securities For a discussion of certain federal income tax consequences applicable to the MX Classes, see "Certain Federal Income Tax Consequences – Tax Treatment of MX Securities", "– Ex- changes of MX Classes and Regular Classes" and "– Taxation of Foreign Holders of REMIC Securities and MX Securities" in the Base Offering Circular. ERISA MATTERS Ginnie Mae guarantees distributions of principal and interest with respect to the Securities. The Ginnie Mae Guaranty is supported by the full faith and credit of the United States of America. The Regular and MX Securities will qualify as "guaranteed governmental mortgage pool certificates" within the meaning of a Department of Labor regulation, the effect of which is to provide that mortgage loans and participations therein underlying a "guaranteed governmen- tal mortgage pool certificate" will not be considered assets of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or subject to section 4975 of the Code (each, a "Plan"), solely by reason of the Plan's purchase and holding of that certificate. Governmental plans and certain church plans, while not subject to the fiduciary responsi- bility provisions of ERISA or the prohibited transaction provisions of ERISA and the Code, may nevertheless be subject to local, state or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their counsel before purchasing any of the Securities. Prospective Plan Investors should consult with their advisors, however, to deter- mine  whether  the  purchase,  holding,  or  resale  of  a  Security  could  give  rise  to  a transaction that is prohibited or is not otherwise permissible under either ERISA or the Code. See "ERISA Considerations" in the Base Offering Circular. The Residual Securities are not offered to, and may not be transferred to, a Plan Investor. S-47