RISK FACTORS You should purchase securities only if you understand and are able to bear the associated risks. The risks applicable to your investment depend on the principal and interest type of your securities. This section highlights certain of these risks. The rate of principal payments on the underlying mortgage loans will affect the rate of principal payments on your securities. The rate at which you will receive principal payments will depend largely on the rate of principal payments, including prepayments,  on  the  mortgage  loans underlying the related trust assets. We expect the rate of principal payments on the underlying   mortgage   loans   to   vary. Borrowers  generally  may  prepay  their mortgage loans at any time without penalty. Rates of principal payments can reduce your yield. The yield on your securities probably will be lower than you expect if: •   you bought your securities at a premium (interest only securities, for example) and principal payments are faster than you expected, or •   you bought your securities at a discount (principal only securities, for example) and principal payments are slower than you expected. In addition, if your securities are interest only securities or securities purchased at a significant premium, you could lose money on your investment if prepayments occur at a rapid rate. Under certain circumstances, a Ginnie Mae issuer has the right to repurchase a defaulted mortgage loan from the related pool of mortgage loans underlying a particular Ginnie Mae MBS Certificate, the effect of which would be comparable to a prepayment of such mortgage loan. At its option and without Ginnie Mae's prior consent, a Ginnie Mae issuer may repurchase any mortgage loan at an amount equal to par less any amounts previously advanced by such   issuer   in   connection   with   its responsibilities as servicer of such mortgage loan to the extent that (i) in the case of a mortgage loan included in a pool of mortgage loans underlying a Ginnie Mae MBS  Certificate  issued  on  or  before December 1, 2002, such mortgage loan has been  delinquent  for  four  consecutive months, and at least one delinquent payment remains uncured or (ii) in the case of a mortgage loan included in a pool of mortgage loans underlying a Ginnie Mae MBS Certificate issued on or after January 1, 2003, no payment has been made on such mortgage loan for three consecutive months. Any  such  repurchase  will  result  in prepayment of the principal balance or reduction in the notional balance of the securities  ultimately  backed  by  such mortgage loan. No assurances can be given as to the timing or frequency of any such repurchases. The level of LIBOR will affect the yields on floating rate and inverse floating rate securities. If LIBOR performs differently from what you expect, the yield on your securities may be lower than you expect. Lower levels of LIBOR will generally reduce the yield on floating rate securities; higher levels of LIBOR will generally reduce the yield on inverse floating rate securities. You should bear in mind that the timing of changes in the level of LIBOR may affect your yield: generally, the earlier a change, the greater the effect on your yield. It is doubtful that LIBOR will remain constant. An investment in the securities is subject to significant reinvestment risk. The rate of principal payments on your securities is uncertain. You may be unable to reinvest the payments on your securities at the same returns provided by the securities. Lower prevailing interest rates may result in an unexpected return of principal. In that interest  rate  climate,  higher  yielding reinvestment opportunities may be limited. Conversely, higher prevailing interest rates may result in slower returns of principal and S-9