Base Offering Circular - Multifamily
482090
17
unable to reinvest at interest rates as favorable as the Interest Rates of the applicable Classes of
Securities. If the prepayment rate on the Mortgage Loans decreases during a period of rising
interest rates, investors may receive declining principal distributions when those investors
otherwise may have been able to reinvest at higher interest rates than the Interest Rates of the
applicable Classes of Securities.
Payment Delay
Distributions of interest on the Securities on any Distribution Date will include interest
accrued thereon through the Accounting Date, which for Fixed-Rate Classes and Delay Classes is
the last day of the month preceding the month in which such Distribution Date occurs. The
effective yield to the Holders of such Securities will be lower than the yield otherwise produced
by the applicable Interest Rate and purchase price because interest will not be distributed on
Book-Entry Securities until the Distribution Date in the month following the month in which
such interest accrues on the Trust MBS.
If the Trustee is unable to verify in any month whether a Ginnie Mae Issuer has reported
correctly the payments that it plans to pay through to the Trustee in that month with respect to
any Trust MBS, any portion of such payments in excess of scheduled principal payments and
accrued interest on those scheduled principal payments will not be passed through as a principal
payment on the Classes currently receiving principal until the Special Excess Distribution Date in
that month. It will be assumed for interest accrual purposes, however, that such payments were
passed through on the Distribution Date in that month. Accordingly, to the extent that payments
on the Trust MBS are passed through on a Special Excess Distribution Date, the effective yield
for a Class currently receiving principal will be less than the yield otherwise produced if all
payments received on the Trust MBS in that month had been paid on the Distribution Date to
Holders of the Securities.
Assumability of FHA Loans
FHA Loans do not contain due-on-sale clauses restricting sale or other transfer of the
related Mortgaged Properties. Any transfer of a Mortgaged Property is subject to HUD review
and approval under the terms of HUDs Regulatory Agreement with the owner, which is
incorporated by reference into the mortgage.
Weighted Average Life
The Weighted Average Life of a security refers to the average amount of time that will
elapse from the date of its issuance until each dollar of principal of that security will be repaid to
the investor. As a result, any projection of the Weighted Average Life of and yield on any Class
of the Securities must include an assumption about the anticipated timing and amount of
payments on those Securities, which will depend upon the rate of prepayments of the Mortgage
Loans, including optional borrower prepayments and prepayments resulting from liquidation of
defaulted Mortgage Loans. In general, prepayments of principal and defaults on the Mortgage
Loans will shorten the Weighted Average Life and term to maturity of each related Class of
Securities.