Base Offering Circular – Multifamily 34 date.  A Single Rate VRDI Security that provides for an objective rate other than a qualified inverse floating rate is converted to a hypothetical fixed rate security by substituting for the objective rate a fixed rate that reflects the yield that reasonably is expected for the Single Rate VRDI Security.  Qualified stated interest or OID allocable to an accrual period with respect to a Single Rate VRDI Security must be increased (or decreased) if the interest actually accrued or paid during such accrual period exceeds (or is less than) the interest assumed to be accrued or paid during such accrual period under the related hypothetical fixed rate security. Except as provided below, the amount and accrual of OID on a Variable Rate Security that qualifies as a VRDI but is not a Single Rate VRDI Security (a “Multiple Rate VRDI Security”) is determined by converting such Security into a hypothetical equivalent fixed rate security that has terms that are identical to those provided under the Multiple Rate VRDI Security, except that such hypothetical equivalent fixed rate security will provide for fixed rate substitutes in lieu of each qualified floating rate, qualified inverse floating rate or objective rate provided for under the Multiple Rate VRDI Security in the manner described above for Single Rate VRDI Securities.  Qualified stated interest or OID allocable to an accrual period with respect to a Multiple Rate VRDI Security must be increased (or decreased) if the interest actually accrued or paid during such accrual period exceeds (or is less than) the interest assumed to be accrued or paid during such accrual period under the hypothetical equivalent fixed rate security. Under the OID Regulations, the amount and accrual of OID on a Multiple Rate VRDI Security that provides for stated interest at either one or more qualified floating rates or at a qualified inverse floating rate and in addition provides for stated interest at a single fixed rate (other than an initial fixed rate that is intended to approximate the subsequent variable rate) is determined using the method described above for all other Multiple Rate VRDI Securities except that prior to its conversion to a hypothetical equivalent fixed rate security, such Multiple Rate VRDI Security is treated as if it provided for a qualified floating rate (or a qualified inverse floating rate), rather than the fixed rate.  The qualified floating rate (or qualified inverse floating rate) replacing the fixed rate must be such that the fair market value of the Multiple Rate VRDI Security as of its issue date would be approximately the same as the fair market value of an otherwise identical debt instrument that provides for the qualified floating rate (or qualified inverse floating rate), rather than the fixed rate. Certain Regular Securities may provide for interest payable at least annually based on a weighted average of the interest rates on some or all of the qualified mortgages of the related Trust REMIC (“Weighted Average Securities”).  Although the treatment of such securities is not entirely clear under the OID Regulations, it appears that Weighted Average Securities bear interest at an “objective rate” and can be considered to have qualified stated interest, provided that the average value of the rate during the first half of the Security’s term is not reasonably expected to be either significantly less than or significantly greater than the average value of the rate during the final half of the Security’s term (i.e., the rate will not result in a significant frontloading or backloading of interest).  Until the Service provides contrary administrative guidance on the income tax treatment of Weighted Average Securities, or unless otherwise specified in the related Offering Circular Supplement, the Tax Administrator intends to account for such Securities as described above for objective rate VRDI Securities.