Base Offering Circular - Multifamily 482090 22 856(c)(4)(A) of the Code; and interest on such Securities will be considered “interest on obligations secured by mortgages on real property” within the meaning of section 856(c)(3)(B), all in the same proportion that the related Trust REMIC’s assets would so qualify.  If 95 percent or more of the assets of a given Trust REMIC constitute qualifying assets for DB&Ls and REITs, the related Securities and the income thereon will be treated entirely as qualifying assets and income for DB&Ls and REITs.  In the case of a Trust that issues a Double REMIC Series, the Trust REMICs related to such Double REMIC Series will be treated as a single REMIC for purposes of determining the extent to which the related Securities and the income thereon will be treated as such assets and income.  Regular and Residual Securities held by a financial institution to which section 585 of the Code applies will be treated as evidences of indebtedness for purposes of section 582(c)(1) of the Code.  Regular Securities also will be “qualified mortgages” within the meaning of section 860G(a)(3) of the Code with respect to other REMICs. Tax Treatment of Regular Securities General Except as described below for Regular Securities issued with OID or acquired with market discount or premium, interest paid or accrued on a Regular Security will be treated as ordinary income to the Holder and a principal payment on such Security will be treated as a return of capital to the extent that the Holder’s basis in the Security is allocable to that payment. Although the treatment of Payment Penalties is not certain, it is likely that Prepayment Penalties distributed in respect of a Regular Security will be treated as ordinary income, or interest income, for the period in which it is paid.  Holders of Regular Securities must report income from such Securities under an accrual method of accounting, even if they otherwise would have used the cash receipts and disbursements method.  The Tax Administrator will report annually to the Service and to Holders of record with respect to interest paid or accrued and OID, if any, accrued on the Securities. Single Class REMICs In the case of certain Trust REMICs that are considered to be “single-class REMICs” under temporary Treasury regulations, Holders of Regular Securities who are individuals, trusts, estates, or pass-through entities in which such persons hold interests may be required to recognize certain amounts of income in addition to interest and discount income.  A single-class REMIC, in general, is a REMIC that (i) would be classified as an investment trust in the absence of a REMIC election or (ii) is substantially similar to an investment trust and was structured with the principal purpose of avoiding the allocation of “allocable investment expenses” (i.e., expenses normally allowable under section 212 of the Code, which may include servicing and administrative fees and the guarantee fee with respect to the Trust Assets) to Holders of Regular Securities.  Under the temporary Treasury regulations, each Holder of a regular or residual interest in a single-class REMIC is allocated (i) a share of the REMIC’s allocable investment expenses and (ii) a corresponding amount of additional income.  Section 67 of the Code permits an individual, trust or estate to deduct miscellaneous itemized expenses (including section 212 expenses) only to the extent that such expenses, in the aggregate, exceed 2% of its adjusted gross income.  Consequently, an individual, trust or estate that holds a regular interest in a single-class