The purpose of this bulletin is to remind Multiclass Sponsors that the option to structure the collapse of a security group within a Multiclass transaction is available. Certain Security Groups may be collapsed at the election of an investor holding 100% of the related Regular and Residual Securities, allowing purchase of the underlying assets after three Business Days’ notice at a price based on principal, accrued interest, and a nominal termination fee. Execution is subject to customary tax opinion requirements confirming REMIC-qualified liquidation treatment.
Consistent with the terms of the Ginnie Mae Multiclass Securities program, parties must plan for the collapse of the groups and include the appropriate language in the Offering Circular Supplement and the REMIC Trust Agreement to modify the standard provisions of the documents. The applicable language may vary by document.
For the Offering Circular Supplement, the applicable language can be found in the Multiclass Guide (the “Guide”) under Description of the Securities—Termination as follows:
[NOTE TO TRUST COUNSEL: INCLUDE THE FOLLOWING LANGUAGE WHEN THERE IS A SEPARATELY COLLAPSIBLE SECURITY GROUP:
With respect to [each of] Security Group[s] [ ] [and [ ]], a Holder of all of the outstanding Regular Securities of any such Security Group and the related Class of Residual Securities will have the right to purchase the related Trust Assets upon three Business Days' notice (the "Notice Period"). The purchase will be for cash in an amount equal to (A)(i) the aggregate remaining principal balance of the assets of such Security Group, but in no event less than the aggregate outstanding principal amount of the Securities of such Security Group, plus (ii) accrued interest on the Securities of such Security Group, less (B) amounts on deposit in the related Trust REMIC[s] [or Trust REMICs, as applicable], for distribution on the Securities of such Security Group, plus (C) a $5,000 termination fee payable to the Trustee in connection with each Security Group to be terminated. After the Notice Period, and upon such purchase, the Trustee will terminate the related Trust REMIC[s] [or Trust REMICs, as applicable]. Upon such termination, the Trustee will distribute the cash proceeds of the sale of the related Trust Assets to the Holder of the related Securities (which distribution may be offset against amounts due on the sale of such assets), will cancel the Securities of the related Security Group and cause the removal from the Book-Entry Depository Account of all Classes of the related Security Group, will cancel the related Class of Residual Securities, and will credit the remaining Trust Assets in the related Security Group to the account of the surrendering Holder. Notwithstanding anything to the contrary contained herein, no such termination will be allowed unless the Trustee and Ginnie Mae are provided, at no cost to either the Trustee or Ginnie Mae, an Opinion of Counsel, acceptable to the Trustee and Ginnie Mae, to the effect that such termination constitutes a "qualified liquidation" under the REMIC Provisions, including Section 860F(a)(4) of the Code, and such termination will not result in a disqualification of any Trust REMIC that is not terminated at such time or the imposition of any "prohibited transactions" or "contributions" tax under the REMIC Provisions on any Trust REMIC that is not terminated at such time.]
Capitalized terms used herein but not defined have the meanings in the Guide currently in effect, as amended by any previous Multiclass Participants Memoranda. We remind all program participants that the Guide is periodically updated, and we encourage parties to refer to Ginnie Mae’s website for the most current version of the Guide.
Please call Ginnie Mae’s Office of Capital Markets at (202) 436-0968 with any questions or comments regarding this announcement.