pages, construction defects, inclement
weather, completion of or delays in the cost
certification process and changes in contrac-
tors, owners and architects related to the
multifamily project. During any such delay,
the trust will not be entitled to any principal
payments that may have been made by the
borrower on the related underlying mortgage
loan. The distribution of any such principal
payments will not occur until the earliest of
(1) the liquidation of the mortgage loan,
(2) at the related Ginnie Mae Issuer's op-
tion, either (a) the first Ginnie Mae certifi-
cate payment date of the Ginnie Mae project
loan certificate following the conversion of
the Ginnie Mae construction loan certificate
or (b) the date of conversion of the Ginnie
Mae construction loan certificate to a Ginnie
Mae project loan certificate, and (3) the ma-
turity date (as adjusted for any previously
granted extensions) of the Ginnie Mae con-
struction loan certificate. However, the hold-
ers of the securities will not receive any such
amounts until the next distribution date on
the securities and will not be entitled to
receive any interest on such amount.
The yield on securities that would benefit
from a faster than expected payment of
principal (such as securities purchased at
a discount) may be adversely affected if
the underlying mortgage loan begins to
amortize prior to the conversion of a Gin-
nie Mae construction loan certificate to a
Ginnie Mae project loan certificate.
As
holders of Ginnie Mae construction loan cer-
tificates are entitled only to interest, any
scheduled payments of principal received
with respect to the mortgage loans underly-
ing the Ginnie Mae construction loan certifi-
cate will not be passed through to the trust.
Any such amounts will be deposited into a
non-interest bearing, custodial account main-
tained by the related Ginnie Mae issuer and
will be distributed to the trust (unless other-
wise negotiated between the Ginnie Mae Is-
suer and the contracted security purchaser)
on the earliest of (1) the liquidation of the
mortgage loan, (2) at the related Ginnie Mae
Issuer's option, either (a) the first Ginnie
Mae certificate payment date of the Ginnie
Mae project loan certificate following the
conversion of the Ginnie Mae construction
loan certificate or (b) the date of conversion
of the Ginnie Mae construction loan certifi-
cate to a Ginnie Mae project loan certificate,
and (3) the maturity date (as adjusted for
any previously granted extensions) of the
Ginnie Mae construction loan certificate.
However, the holders of the securities will
not receive any such amounts until the next
distribution date on the securities and will
not be entitled to receive any interest on
such amount. The delay in payment of the
scheduled principal may affect, perhaps sig-
nificantly, the yield on those securities that
would benefit from a higher than anticipated
rate of prepayment of principal.
If the amount of the underlying mortgage
loan at final endorsement by FHA is less
than the aggregate principal amount of
the Ginnie Mae construction loan certifi-
cates upon completion of the particular
multifamily project, the Ginnie Mae con-
struction loan certificates must be prepaid
in the amount equal to the difference be-
tween the aggregate principal balance of
the Ginnie Mae construction loan certifi-
cates and the principal balance of the Gin-
nie Mae project loan certificates issued
upon conversion.
The reduction in the
underlying mortgage loan amount could oc-
cur as a result of the cost certification process
that takes place prior to the conversion to a
Ginnie Mae project loan certificate. In such a
case, the rate of prepayment on your securi-
ties may be higher than expected.
Available information about the mortgage
loans is limited. Generally, neither audited
financial statements nor recent appraisals are
available with respect to the mortgage loans,
the mortgaged properties, or the operating
revenues, expenses and values of the mort-
gaged properties. Certain default, delin-
quency and other information relevant to the
likelihood of prepayment of the multifamily
mortgage loans underlying the Ginnie Mae
multifamily certificates is made generally
available to the public and holders of the
securities should consult such information.
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