Base Offering Circular – Multifamily 39 If the Holder of a Regular Security is a bank, a mutual savings bank, a DB&L, or a similar institution described in section 582 of the Code, any gain or loss on the sale or exchange of the Regular Security will be treated as ordinary income or loss.  In the case of other types of Holders, gain from the disposition of a Regular Security that otherwise would be capital gain will be treated as ordinary income to the extent that the amount actually includible in income with respect to the Security by the Holder during his holding period is less than the amount that would have been includible in income if the yield on that Security during the holding period had been 110% of a specified U.S. Treasury borrowing rate as of the date that the Holder acquired the Security.  Although the relevant legislative history indicates that the portion of the gain from disposition of a Regular Security that will be recharacterized as ordinary income is limited to the amount of OID (if any) on the Security that was not previously includible in income, the applicable Code provision contains no such limitation. The Code contains provisions that require the recognition of gain upon the “constructive sale of an appreciated financial position.”  These provisions do not apply to Classes of Certificates other than the Notional Classes.  Investors in the Notional Classes should consult their own tax advisors with respect to the possible application of these provisions. Tax Treatment of Residual Securities Overview Residual Securities will represent residual interests in the Trust REMIC or Trust REMICs to which they relate.  A REMIC is an entity for federal income tax purposes consisting of a fixed pool of mortgages or other mortgage-backed assets (including Ginnie Mae Multifamily Certificates) in which investors hold multiple classes of interests.  To be treated as a REMIC, the Trust (or one or more segregated pools of Trust assets) must meet certain continuing qualification requirements, and a REMIC election must be in effect.  See “—REMIC Qualification.”  A Trust REMIC generally will be treated as a pass-through entity for federal income tax purposes, i.e., as not subject to entity-level tax.  All interests in a Trust REMIC other than the Residual Securities must be regular interests, i.e., Regular Securities or Pooling REMIC Regular Interests (as defined below).  As described in “—Tax Treatment of Regular Securities” above, a regular interest generally is an interest whose terms are analogous to those of a debt instrument, and it generally is treated as such an instrument for federal income tax purposes.  The Regular Securities will generate interest and OID deductions for the related Trust REMIC or, in the case of a Double REMIC Series, the Issuing REMIC (as defined below).  As a residual interest, a Residual Security has a right to the income generated by the related Trust REMIC assets in excess of the amount necessary to service the related regular interests and pay such Trust REMIC’s expenses.  In a manner similar to that employed in the taxation of partnerships, Trust REMIC taxable income or loss will be determined at the Trust REMIC level, but passed through to the related Residual Holders.  Thus, Trust REMIC taxable income or loss will be allocated pro rata to such Residual Holders, and each Residual Holder will report his share of Trust REMIC taxable income or loss on his own federal income tax return.  Prospective investors in Residual Securities should be aware that the obligation to account for the Trust REMIC’s income or loss will continue until all of the Regular Securities have been retired, which may not occur until well beyond the date on which the last payments, if any, on Residual Securities are made.  In addition, because of the way in which REMIC taxable income is calculated, a Residual