The scope of such information is limited,
however, and accordingly, at a time when
you might be buying or selling your securities,
you may not be aware of matters that, if known,
would affect the value of your securities.
FHA has authority to override lockouts
and prepayment limitations.
FHA insur-
ance and certain mortgage loan and trust
provisions may affect lockouts and the right
to receive prepayment penalties. FHA may
override any lockout or prepayment penalty
provision with respect to FHA-insured Mort-
gage Loans if it determines that it is in the
best interest of the federal government to
allow the mortgagor to refinance or to prepay
in part its mortgage loan.
Holders entitled to prepayment penalties
may not receive them.
Prepayment penal-
ties received by the trustee will be distrib-
uted to Class IO or Class MA, as applicable,
as further described in this Supplement. Gin-
nie Mae, however, does not guarantee that
mortgagors will in fact pay any prepayment
penalties or that such prepayment penalties
will be received by the trustee. Accordingly,
holders of the classes entitled to receive
prepayment penalties will receive them only
to the extent that the trustee receives them.
Moreover, even if the trustee distributes pre-
payment penalties to the holders of that
class, the additional amounts may not offset
the reduction in yield caused by the corre-
sponding prepayments.
The rate of principal payments on the un-
derlying certificates will directly affect the
rate of principal payments on the group 2
securities.
The underlying certificates will
be sensitive in varying degrees to
the rate of payments of principal (in-
cluding prepayments) of the related
mortgage loans, and
the priorities for the distribution of
principal among the classes of the un-
derlying series.
Prepayments on the related mortgage loans
may have occurred at rates faster or slower
than those initially assumed. This supple-
ment contains no information as to whether
the underlying certificates have performed as
originally anticipated. The Updated Exhib-
its A in Exhibit D, however, contain certain
information regarding the related mortgage
loans as of the cut-off date.
The securities may not be a suitable invest-
ment for you.
The securities, especially
the group 2 securities and, in particular, the
interest only, accrual and residual classes,
are not suitable investments for all investors.
Only "accredited investors," as defined in
Rule 501(a) of Regulation D of the Securi-
ties Act of 1933, who have substantial experi-
ence in mortgage-backed securities and are
capable of understanding the risks should
invest in the securities.
In addition, although the sponsor intends to
make a market for the purchase and sale of
the securities after their initial issuance, it
has no obligation to do so. There is no assur-
ance that a secondary market will develop,
that any secondary market will continue, or
that the price at which you can sell an invest-
ment in any class will enable you to realize a
desired yield on that investment.
You will bear the market risks of your invest-
ment. The market values of the classes are
likely to fluctuate. These fluctuations may be
significant and could result in significant
losses to you.
The secondary markets for mortgage-related
securities have experienced periods of illi-
quidity and can be expected to do so in the
future. Illiquidity can have a severely adverse
effect on the prices of classes that are espe-
cially sensitive to prepayment or interest rate
risk or that have been structured to meet the
investment requirements of limited catego-
ries of investors.
The residual securities may experience sig-
nificant adverse tax timing consequences. Ac-
cordingly, you are urged to consult tax
advisors and to consider the after-tax effect of
ownership of a residual security and the suit-
ability of the residual securities to your in-
vestment objectives. See "Certain Federal
Income Tax Consequences" in this Supple-
S-11