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- ment and in the base offering circular. You are encouraged to consult advisors re- garding the financial, legal, tax and other aspects of an investment in the securities. You should not purchase the securities of any class unless you understand and are able to bear the prepayment, yield, liquidity and market risks associated with that class. The actual characteristics of the underly- ing mortgage loans will affect the weighted average lives and yields of your securities. The yield and decrement tables in this sup- plement are based on assumed characteris- tics which are likely to be different from the actual characteristics. As a result, the yields on your securities could be lower than you expected, even if the mortgage loans prepay at the constant prepayment rates set forth in the applicable table. It is highly unlikely that the underlying mort- gage loans will prepay at any of the prepay- ment rates assumed in this supplement, or at any constant prepayment rate. THE TRUST ASSETS General The Sponsor intends to acquire the Trust Assets in privately negotiated transactions prior to the Closing Date and to sell them to the Trust according to the terms of a Trust Agreement between the Sponsor and the Trustee. The Sponsor will make certain representations and warranties with respect to the Trust Assets. All Trust Assets, regardless of whether the assets consist of Trust MBS or the Underlying Certificates, will evidence, directly or indirectly, Ginnie Mae Certificates. The Trust MBS (Group 1) The Trust MBS are either: 1.  Ginnie Mae II MBS Certificates guaranteed by Ginnie Mae, or 2.  Ginnie Mae Platinum Certificates backed by Ginnie Mae II MBS Certificates and guaranteed by Ginnie Mae. Each Mortgage Loan underlying a Ginnie Mae II MBS Certificate issued prior to July 1, 2003 bears interest at a Mortgage Rate 0.50% to 1.50% per annum greater than the related Certificate Rate. Each Mortgage Loan underlying a Ginnie Mae II MBS Certificate issued on or after July 1, 2003 bears interest at a Mortgage Rate 0.25% to 0.75% per annum greater than the related Certificate Rate. Ginnie Mae receives a fee (the "Ginnie Mae Certificate Guaranty Fee") for its guaranty of each Ginnie Mae II MBS Certificate of 0.06% per annum of the outstanding principal balance of each related Mortgage Loan. The difference between (a) the Mortgage Rate and (b) the sum of the Certificate Rate and the Ginnie Mae Certificate Guaranty Fee is used to pay the related servicers of the Mortgage Loans a monthly servicing fee. S-9