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pdfGINNIE MAE MULTICLASS SECURITIES PROGRAM
Government National Mortgage Association
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GINNIE MAE®
MULTICLASS SECURITIES GUIDE
Part VI: Ginnie Mae Multiclass Securities Transactions:
Stripped Mortgage-Backed Securities Transaction
Documents (“SMBS”)
April 1, 2008
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
MULTICLASS SECURITIES GUIDE
(April 1, 2008 Edition)
Page
PART I: GINNIE MAE MULTICLASS SECURITIES TRANSACTIONS:
GUIDELINES AND SELECTED TRANSACTION DOCUMENTS
A.
INTRODUCTION TO THE GINNIE MAE MULTICLASS SECURITIES PROGRAM .......................... I-1
B.
TRANSACTION GUIDELINES FOR THE GINNIE MAE MULTICLASS SECURITIES PROGRAM
C.
1.
General Overview .......................................................................................................................... I-2
2.
Transaction Information Internet Posting - e-Access..................................................................... I-3
3.
Ginnie Mae Multiclass Securities Program Conventions............................................................... I-4
4.
Ginnie Mae Multiclass Securities Transaction Participants........................................................... I-5
5.
Trust Counsel’s Responsibilities.................................................................................................... I-6
6.
Post-Closing Matters...................................................................................................................... I-7
GINNIE MAE REMIC AND MX TRANSACTION DOCUMENTS
1.
Form of Transaction Initiation Letter (with attached Financial Advisor Checklist for
Sponsor) for REMIC Transactions................................................................................................. I-8
2.
Sponsor Agreement for REMIC Transactions
a.
Form of Sponsor Agreement for REMIC Transactions ................................................... I-9
b.
Standard Sponsor Provisions for REMIC Transactions (including Supplemental
Statement, Sponsor Certification and Accountants’ Certification) ................................ I-10
3.
Base Offering Circular for Single Family REMIC Transactions ................................................. I-11
4.
Form of Offering Circular Supplement for Single Family REMIC Transactions ........................ I-12
5.
Form of Transfer Affidavit for REMIC Transactions .................................................................. I-13
6.
Form of Guaranty Agreement for Single Family REMIC Transactions ...................................... I-14
(i)
7.
8.
E.
Accountants’ Agreed-Upon Procedures Letters for Single Family REMIC Transactions
a.
Accountants’ Agreed-Upon Procedures Letter concerning the
Offering Circular ........................................................................................................... I-15
b.
Accountants’ Agreed-Upon Procedures Letter as of Closing Date................................ I-16
Form of Closing Flow of Funds Instruction Letter for REMIC Transactions.............................. I-17
GLOSSARY............................................................................................................................................... I-18
PART II: GINNIE MAE MULTICLASS SECURITIES TRANSACTIONS:
ADDITIONAL SELECTED REMIC TRANSACTION DOCUMENTS
A.
INTRODUCTION.......................................................................................................................................II-1
B.
CLOSING CHECKLIST AND TABLE OF CONTENTS FOR REMIC TRANSACTIONS ....................II-2
C.
TRUST AGREEMENTS FOR REMIC TRANSACTIONS
D.
E.
1.
Form of Trust Agreement for REMIC Trusts (including Form of Waiver Agreement)................II-3
2.
REMIC Standard Trust Provisions................................................................................................II-4
3.
Form of MX Trust Agreement ......................................................................................................II-5
4.
MX Standard Trust Provisions......................................................................................................II-6
TRANSFER OF GINNIE MAE CERTIFICATES AND CREATION OF REMIC SECURITIES
1.
Form of Trustee’s Receipt and Safekeeping Agreement for REMIC Transactions ......................II-7
2.
Form of Issuance Statement for REMIC Transactions..................................................................II-8
LEGAL OPINIONS for REMIC Transactions
1.
Form of Transaction Opinion of Trust Counsel for REMIC Transactions....................................II-9
2.
Form of Opinion of Sponsor for REMIC Transactions...............................................................II-10
3.
Form of Tax Opinions of Trust Counsel for REMIC Transactions
a.
Single REMIC ..............................................................................................................II-11
b.
Double REMIC: One Residual Security .......................................................................II-12
c.
Double REMIC: Two Residual Securities ....................................................................II-13
d.
MX (Grantor) Trust ......................................................................................................II-14
4.
Form of Opinion of Trustee’s Counsel for REMIC Transactions ...............................................II-15
5.
Opinion of HUD General Counsel..............................................................................................II-16
(ii)
F.
GINNIE MAE REMIC TRUST ADMINISTRATION AND TAX REPORTING...................................II-17
PART III: GINNIE MAE PLATINUM SECURITIES TRANSACTIONS
PART IV: GINNIE MAE REMIC AND MX TRANSACTIONS:
MULTIFAMILY TRANSACTION DOCUMENTS*
A.
GENERAL OVERVIEW: MULTIFAMILY TRANSACTIONS ............................................................. IV-1
B.
GINNIE MAE MULTIFAMILY TRANSACTION DOCUMENTS........................................................ IV-2
1.
Form of Offering Circular Supplement for Multifamily Transactions........................................ IV-3
4.
Multifamily Base Offering Circular............................................................................................ IV-4
5.
Form of Guaranty Agreement for Multifamily Transactions ...................................................... IV-5
6.
Accountants’ Agreed-Upon Procedures Letters for Multifamily REMIC Transactions
a.
Agreed-Upon Procedures Letter concerning the Offering Circular .............................. IV-6
b.
Agreed-Upon Procedures Letter as of Closing Date..................................................... IV-7
* For multifamily transactions, additional transaction documents found in Parts I and II of the Multiclass
Securities Guide must be delivered, including the Transaction Initiation Letter, Sponsor Agreement, Transfer
Affidavit, Closing Flow of Funds Instruction Letter, Supplemental Statement, if applicable, REMIC Trust
Agreement, MX Trust Agreement, if applicable, Trustee’s Receipt and Safekeeping Agreement and the Issuance
Statement. In addition, opinions of counsel found in Part II of the Multiclass Securities Guide must be delivered,
including the Transaction Opinion, Sponsor Opinion, relevant Tax Opinions, Trustee’s Opinion and Opinion of
HUD General Counsel.
PART V: GINNIE MAE MULTICLASS SECURITIES TRANSACTIONS:
CALLABLE SECURITIES
A.
GENERAL OVERVIEW: CALLABLE TRANSACTIONS .....................................................................V-1
B.
GINNIE MAE CALLABLE TRANSACTION DOCUMENTS
1.
Form of Offering Circular for Callable Securities ........................................................................V-2
2.
Form of Trust Agreement for Callable Trusts...............................................................................V-3
3.
Standard Trust Provisions for Callable Trusts ..............................................................................V-4
4.
Form of Sponsor Agreement for Callable Trusts ..........................................................................V-5
5.
Standard Sponsor Provisions for Callable Trusts..........................................................................V-6
6.
Form of Ginnie Mae Callable Securities Guaranty Agreement ....................................................V-7
7.
Form of Transaction Initiation Letter for Callable Securities .......................................................V-8
(iii)
8.
Form of Accountant’s Agreed-Upon Procedures Letter Concerning the Offering Circular
for Callable Securities...................................................................................................................V-9
9.
Form of Trustee’s Receipt and Safekeeping Agreement for Callable Securities ........................V-10
10.
Form of Issuance Statement for Callable Securities ...................................................................V-11
11.
Form of Transaction Opinion of Trust Counsel for Callable Securities......................................V-12
12.
Form of Tax Opinion of Trust Counsel for Callable Securities ..................................................V-13
13.
Form of Opinion of Sponsor for Callable Securities...................................................................V-14
14.
Form of Opinion of Trustee’s Counsel for Callable Securities ...................................................V-15
15.
Form of Accountants’ Agreed-Upon Procedures Letter as of the Closing Date for
Callable Securities.......................................................................................................................V-16
16.
Form of Closing Flow of Funds Instruction Letter for Callable Securities.................................V-17
17.
Form of Closing Checklist and Table of Contents for Callable Securities..................................V-18
PART VI: GINNIE MAE MULTICLASS SECURITIES TRANSACTIONS:
STRIPPED MORTGAGE-BACKED SECURITIES (“SMBS”)
A.
GENERAL OVERVIEW: SMBS TRANSACTIONS ............................................................................. VI-1
B.
GINNIE MAE SMBS TRANSACTION DOCUMENTS
1.
Pricing Checklist for SMBS Transactions .................................................................................. VI-2
2.
Standard Sponsor Provisions for SMBS Transactions ................................................................ VI-3
3.
Form of Sponsor Agreement for SMBS Transactions ................................................................ VI-4
4.
Base Offering Circular for SMBS Transactions.......................................................................... VI-5
5.
Form of Offering Circular Supplement for SMBS Transactions ................................................ VI-6
6.
Form of Accountants’ Agreed-Upon Procedures Letter concerning the Offering Circular
for SMBS Transactions............................................................................................................................VI-7
7.
Form of Guaranty Agreement for SMBS Transactions............................................................... VI-8
8.
Form of Issuance Statement for SMBS Transactions.................................................................. VI-9
9.
Form of Trustee’s Receipt and Safekeeping Agreement for SMBS Transactions .................... VI-10
10.
Form of Closing Flow of Funds Letter for SMBS Transactions ............................................... VI-11
11.
Form of Trust Agreement for SMBS Transactions ................................................................... VI-12
12.
Standard Trust Provisions for SMBS Transactions................................................................... VI-13
(iv)
13.
Form of Form of Transaction Opinion of Trust Counsel for SMBS Transactions.................... VI-14
14.
Form of Opinion of Sponsor for SMBS Transactions............................................................... VI-15
15.
Form of Tax Opinion of Trust Counsel for SMBS Transactions .............................................. VI-16
16.
Form of Opinion of Trustee’s Counsel for SMBS Transactions ............................................... VI-17
17.
Form of Accountants’ Agreed-Upon Procedures Letter as of Closing Date
for SMBS Transactions............................................................................................................. VI-18
(v)
GENERAL OVERVIEW: SMBS TRANSACTIONS
INTRODUCTORY STATEMENT
Ginnie Mae provides for the guarantee of Stripped Mortgage-Backed Securities under the
Ginnie Mae Multiclass Securities Program. The requirements of the Ginnie Mae Multiclass
Securities Program are set forth in the Ginnie Mae Multiclass Securities Guide (the “Guide”), which
consists of six parts. Refer to Part I of the Guide for an introduction to, and transaction guidelines
for, the Ginnie Mae Multiclass Securities Program generally. This Part VI of the Guide relates to the
issuance of a Ginnie Mae SMBS Security and provides for modifications of the transaction
guidelines for such issuance. Capitalized terms that are used but not defined herein have the
meanings ascribed thereto in the Glossary contained in Part I of the Guide.
The Standard Trust Provisions for SMBS Trusts and Standard Sponsor Provisions for SMBS
Trusts are contained in this Part VI. For issuances of SMBS Securities, the related transaction parties
are required to use the forms of documents specifically related to SMBS transactions contained in
this Part VI. Any changes to any transaction documents will require prior approval by Ginnie Mae
and Ginnie Mae’s Legal Advisors.
This Part VI of the Guide also provides information regarding associated fees and important
Ginnie Mae policy regarding SMBS Trusts.
SMBS TRUSTS
SMBS, which will be sold from time to time in one or more series, represent interests in
separate Ginnie Mae SMBS Trusts established from time to time. Ginnie Mae guarantees the timely
payment of principal and interest on each Class of SMBS.
Each Trust will be comprised primarily of (i) “fully modified pass-through” mortgage-backed
certificates as to which Ginnie Mae has guaranteed the timely payment of principal and interest
pursuant to the Ginnie Mae I Program or the Ginnie Mae II Program, (ii) certificates backed by
Ginnie Mae MBS Certificates as to which Ginnie Mae has guaranteed the timely payment of
principal and interest pursuant to the Ginnie Mae Platinum Program, (iii) REMIC or comparable
mortgage certificates, or (iv) previously issued Ginnie Mae Guaranteed Stripped Mortgage-Backed
Securities (“SMBS Securities”), in each case, evidencing interests in trusts consisting primarily of
direct or indirect interests in Ginnie Mae Certificates, as further described in the related Offering
Circular Supplement.
Each Series will be issued in two or more Classes. Each Class of Securities of a Series will
evidence an interest in future principal payments and/or an interest in future interest payments on the
Trust Assets included in the related Trust. The Trust created for each issue of SMBS Securities will
be classified as a grantor trust.
Ginnie Mae will be entitled to a Guaranty Fee payable at the settlement (i.e., the Closing
Date) of each SMBS Trust. The Ginnie Mae Guaranty Fee is an amount that equals the product of
VI-1-1
0.03125% and the aggregate Class Principal Balance of the Securities as of the Closing Date. The
minimum deal size of an SMBS issuance is $1,000,000,000.
VI-1-2
GINNIE MAE SMBS TRANSACTION
PRICING CHECKLIST FOR SMBS TRANSACTIONS
PROPOSED GINNIE MAE SMBS TRUST _____
The purpose of this checklist is to gather information from a Sponsor about its proposed Ginnie Mae
Stripped Mortgage-Backed Securities (SMBS) in order to support Ginnie Mae’s decision to initiate a
transaction. The responses to the following questions were obtained from the Sponsor, [SPONSOR,]
during one or more telephone calls with [SPONSOR REP] on [DATE].
1. Characteristics of the proposed Ginnie Mae Certificates to
be conveyed to the Ginnie Mae
SMBS Trust:
a.
Trust Assets
b. Aggregate Remaining Balance
c.
Certificate Rate
2. Anticipated key dates:
a.
Platinum Submission Date
b. Platinum Settlement Date
c.
Final Structure Date
d. Latest Sponsor Agreement Date
e.
Pool Information Date
f.
Pool Wire Date
g. Closing Date
3. Identification of proposed Ginnie Mae - approved key Participants:
VI-2-1
Name
Role
Ginnie Mae – Approved
Yes
No
Co-Sponsor
Trustee
Trust Counsel
Co-Trust Counsel
Accountant
An announcement of the characteristics of the Trust Assets to be conveyed to the
proposed Ginnie Mae SMBS Trust will be posted to e-Access and distributed to the
press shortly after Noon Eastern Time on the second Business Day after pricing. Who
are the contact persons to be identified in the announcement?
Sponsor:
Phone
Co-Sponsor:
Phone
Yes
5.
6.
a
Are you aware that Ginnie Mae will require that you issue each Class in
denominations equal to the lesser of (a) $100,000 Original Notional or Original
Principal Balance or (b) the Original Notional or Original Principal Balance if
such balance is less than $100,000?
b.
In addition, have you informed or will you inform your sales force and other
Broker/Dealers to whom you will sell these classes on the Closing Date that no
such class is intended to be distributed to investors who are not institutional
“accredited investors,” as defined in Rule 501(a)(1), (2), (3), or (7) of
Regulation D of the Securities Act of 1933, as amended and who do not have
substantial experience in mortgage-backed securities and are not capable of
understanding and are unable to bear the risks associated with such an
investment?
a.
Has the Trustee Fee been determined?
VI-2-2
No
b.
Are you aware that the WAC of the trust assets associated with the Trustee Fee must
be equal to the lowest WAC of any pool in the Platinum Security?
c.
Are you aware that the maturity date of the trust assets associated with the Trustee Fee
must be the same as the maturity date of the Platinum Security?
7.
Do you anticipate any difficulty in the acquisition of the proposed Trust Assets or sale
of the proposed Ginnie Mae SMBS Securities?
8
Are there any unique or unusual features in the proposed Ginnie Mae SMBS
Securities Structure that may be inconsistent with the policies and purposes of the
Ginnie Mae Multiclass Securities Program as reflected in the Ginnie Mae Multiclass
Securities Guide currently in effect and the Ginnie Mae approved SMBS Program
documentation provided to date?
9.
Does the proposed Ginnie Mae SMBS Securities Structure present an increased
risk of Ginnie Mae’s having to perform under its guarantee of the proposed Ginnie
Mae SMBS Securities?
10.
Are there any unique or unusual features in the proposed Ginnie Mae SMBS
Securities Structure that might cause the Financial Advisor, Accountant or Tax
Administrator difficulty in reverse-engineering the transaction?
11.
Do you anticipate any difficulty in qualifying the proposed Ginnie Mae SMBS
Securities Structure as Grantor Trust from a tax perspective and obtaining an
unqualified tax opinion?
12.
Are you aware that a Supplemental Statement and an investor Notification, in
substantially the forms attached as Exhibits 2 and 3 to the Standard Sponsor
Provisions, will be required if the actual characteristics of the Trust Assets are
such that there is a material change in the investment characteristics of any
Class as described in the Offering Circular Supplement or there is a XX% or
greater change in the projected yield of any Class at the pricing prepayment
speed?
VI-2-3
STANDARD SPONSOR PROVISIONS FOR SMBS TRANSACTIONS
VI-3-0
______________________________________________________________________________
STANDARD SPONSOR PROVISIONS
______________________________
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GUARANTEED STRIPPED MORTGAGE-BACKED SECURITIES
____________
April 1, 2008 Edition
______________________________________________________________________________
VI-3-1
STANDARD SPONSOR PROVISIONS
THESE STANDARD SPONSOR PROVISIONS are to be incorporated by reference in each
Sponsor Agreement relating to the issuance of Ginnie Mae Stripped Mortgage-Backed Securities
entered into by and between the GOVERNMENT NATIONAL MORTGAGE ASSOCIATION and
each Sponsor.
SECTION 1. Definitions. Capitalized terms used and not defined herein shall have the meanings
assigned to them in the Glossary included in the Ginnie Mae Multiclass Securities Guide in effect as
of the date of the related Sponsor Agreement, except to the extent modified by the following:
[None.]
SECTION 2. Commitment to Sell and Purchase. Subject to satisfaction of the conditions to
Sponsor’s obligations set forth in these Standard Sponsor Provisions, on the Closing Date the
Sponsor will establish an SMBS Trust by executing an SMBS Trust in form and substance
substantially similar to the form included in Part VI of the Ginnie Mae Multiclass Securities Guide,
with only such changes as are necessary to reflect the Securities Structure or as are approved by
Ginnie Mae. Pursuant to an SMBS Trust Agreement, the Sponsor (or its Participating Affiliates) will
transfer all of Sponsor’s and the Participating Affiliates’ interest in identified Trust Assets to the
SMBS Trust in consideration of specified Securities, representing undivided beneficial ownership
interests in the SMBS Trust.
SECTION 3. Commitment to Issue Ginnie Mae Guaranty. Subject to satisfaction of the
conditions to Ginnie Mae’s obligations set forth in the Sponsor Agreement, including these Standard
Sponsor Provisions, Ginnie Mae will guarantee the timely payment of principal of and interest on
each Security (in accordance with its terms) issued by an SMBS Trust pursuant to an SMBS Trust
Agreement. To effect the Ginnie Mae Guaranty, on the Closing Date, Ginnie Mae will execute a
Guaranty Agreement authorizing the Trustee to issue the related Series of Securities entitled to the
benefits of the Ginnie Mae Guaranty. The Securities shall only be issued in book-entry form. Each
Security issued by the Trustee pursuant to the authority of the Ginnie Mae Guaranty shall be entitled
to the benefits of the Ginnie Mae Guaranty and shall be valid and obligatory for any purpose. Ginnie
Mae will have no obligation to issue the Ginnie Mae Guaranty except upon full satisfaction of all
conditions to closing. The obligations of Ginnie Mae on any Security or pursuant to the related
Guaranty Agreement will terminate upon the retirement of that Security pursuant to the terms of the
related SMBS Trust Agreement.
SECTION 4. Representations and Warranties of the Sponsor. The Sponsor hereby represents and
warrants, as of the date of the Sponsor Agreement, as follows:
(a)
The Sponsor and its Participating Affiliates have acquired or by the Closing Date
will acquire the Trust Assets in the ordinary course of its business, in good faith,
for value and without notice of any claim against or claim to any of the Trust
Assets on the part of any person.
VI-3-2
(b)
Neither the Sponsor nor its Participating Affiliates have any actual or constructive
knowledge or notice of any interest in the Trust Assets contrary to the interest of
the Trustee under any SMBS Trust Agreement.
(c)
The Sponsor and its Participating Affiliates, as applicable, have the full power,
authority and legal right to transfer and convey the Trust Assets to the Trustee and
have the full power, authority and legal right to execute and deliver the Sponsor
Agreement, to engage in the transactions contemplated therein and to fully
perform and observe the terms and conditions thereof.
(d)
The execution and delivery by the Sponsor of the Sponsor Agreement are within
the legal power of, and have been duly authorized by all necessary actions on the
part of, the Sponsor. Neither the execution and delivery of the Sponsor Agreement
by the Sponsor, nor the consummation by the Sponsor of the transactions
contemplated in the Sponsor Agreement, nor compliance by the Sponsor with the
provisions thereof, will (i) conflict with or result in a breach of, or constitute a
default under, any of the provisions of the certificate of incorporation or bylaws of,
or any law, governmental rule or regulation, or any judgment, decree or order
binding on, the Sponsor, its Participating Affiliates or its properties, or any of the
provisions of any indenture, mortgage, deed of trust, contract or other instrument
to which it or its Participating Affiliates are a party or by which they are bound, or
(ii) result in the creation or imposition of any lien, charge or encumbrance upon
any of its or its Participating Affiliates’ properties pursuant to the terms of any
such indenture, mortgage, deed of trust, contract or other instrument.
(e)
The Sponsor Agreement has been duly executed and delivered by the Sponsor and
constitutes a legal, valid and binding agreement of the Sponsor, enforceable in
accordance with its terms subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency or other similar laws affecting creditors’
rights and to general principles of equity.
(f)
No consent, approval, authorization or order of or registration or filing with, or
notice to, any governmental authority or court is required for the execution,
delivery and performance of, or compliance by the Sponsor with, the Sponsor
Agreement or the consummation by the Sponsor of any other transaction
contemplated thereby.
(g)
No certificate of an officer of the Sponsor or Participating Affiliate, statement
furnished pursuant hereto in writing, or report delivered pursuant to the terms
hereof to Ginnie Mae, any Affiliate or designee of Ginnie Mae, or the Trustee by
the Sponsor contains any untrue statement of a material fact, or omits a material
fact necessary to make the certificate, statement, or report not misleading in light
of the circumstances under which such certificate, statement or report is given.
(h)
Neither the Sponsor nor any of its Participating Affiliates has dealt with any
broker, investment banker, or agent or other person that may be entitled to any
commission or compensation in connection with the sale of Trust Assets to the
VI-3-3
related SMBS Trust, or any such commission or compensation has been paid in
full.
(i)
There is no litigation pending or, to the Sponsor’s knowledge, threatened against
the Sponsor or any of its Participating Affiliates that could reasonably be expected
to affect adversely the transfer of the Trust Assets, the issuance of the Securities or
the execution, delivery, performance or enforceability of the Sponsor Agreement,
including the Sponsor’s performance under any indemnification provisions.
(j)
At the time of the issuance of the Securities, the Trust Assets will be assets of the
related SMBS Trust and not assets of the Sponsor or any other person.
(k)
Immediately prior to the transfer of Trust Assets to the related SMBS Trust, the
Sponsor or its Participating Affiliates will be the sole owners of, and will have
good and marketable title to, the Trust Assets, subject to no prior lien, mortgage,
security interest, pledge, charge or other encumbrance or any such encumbrance
will be discharged, and on the Closing Date, all right, title and interest in the Trust
Assets shall be transferred to the related SMBS Trust and the Trust Assets shall be
duly and validly delivered to such SMBS Trust, together with any other documents
or certificates required by the Sponsor Agreement. Following the transfer of Trust
Assets to an SMBS Trust, the SMBS Trust will own such Trust Assets, free and
clear of any lien, mortgage, security interest, pledge, charge or other encumbrance.
(l)
The transfer, assignment and conveyance of the Trust Assets by the Sponsor and
its Participating Affiliates pursuant to the Sponsor Agreement are not subject to
bulk transfer laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(m)
The Trust Assets are of the type and with the payment characteristics identified in
the Offering Circular Supplement. Each of the Trust Assets satisfies the
characteristics specified in the Terms Sheet under the heading “Actual
Characteristics of the Mortgage Loans Underlying the Trust Asset(s).”
(n)
The Trust Assets consist solely of Trust MBS, Underlying Certificates or
Underlying SMBS Securities that evidence, directly or indirectly, interests in
Ginnie Mae Certificates.
(o)
The consideration received by each of the Sponsor and any of its Participating
Affiliates upon the transfer of Trust Assets under an SMBS Trust Agreement
constitutes fair consideration and reasonably equivalent value for the Trust Assets
transferred by it.
(p)
The Sponsor is solvent, and the transfer of the Trust Assets will not cause the
Sponsor or any of its Participating Affiliates to become insolvent; the transfer of
the Trust Assets is not undertaken with the intent to hinder, delay or defraud any of
the creditors of the Sponsor or its Participating Affiliates.
VI-3-4
(q)
The Sponsor relinquishes and will cause its Participating Affiliates to relinquish all
rights to possess, control and monitor the Trust Assets transferred to an SMBS
Trust except such rights as any may have as a Holder of the related Securities.
(r)
The description of the plan for distribution of the Securities contained under the
heading “Plan of Distribution” in the Offering Circular Supplement related to the
Securities does not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading.
(s)
The Sponsor has delivered to Ginnie Mae financial statements (including the notes
attached thereto) of the Sponsor for its two most recently completed fiscal years,
certified by independent certified public accountants. Such financial statements
have been prepared in accordance with generally accepted accounting principles
consistently applied. These financial statements fairly reflect the financial
condition of the Sponsor and the results of its operations as of the dates and for the
periods presented. Since the dates of such statements, no materially adverse
changes in the financial condition, business or operations of the Sponsor have
occurred that could reasonably be expected to affect adversely the transfer of the
Trust Assets, the issuance of the Securities or the execution, delivery, performance
or enforceability of the Sponsor Agreement, including the Sponsor’s performance
under any indemnification provisions.
(t)
The Offering Circular Supplement includes an accurate description of the
Securities Structure.
(u)
Assuming the full and timely payment of principal and interest on the Trust Assets
(as those Trust Assets are identified in the Offering Circular Supplement),
payments on the Trust Assets in all possible prepayment scenarios will be
adequate to make full and timely payments of principal and interest on the
Securities in accordance with the terms of the Securities as described in the
Offering Circular Supplement when combined with other Securities with
appropriate Class Principal or Class Notional Balances (giving effect, in each case,
to all possible re-combinations of SMBS Securities and/or Trust Assets) and will
pay in full each Class of Securities by its Final Distribution Date regardless of the
rate of prepayment of the Mortgage Loans underlying the Trust Assets.
(v)
Assuming the full and timely payment of principal and interest on the Trust
Assets, payments on the Trust Assets in all possible prepayment scenarios will be
adequate to make full and timely payments of principal and interest on the
Securities in accordance with the terms of the related SMBS Trust Agreement
when combined with other Securities with appropriate Class Principal or Class
Notional Balances (giving effect, in each case, to all possible re-combinations of
SMBS Securities and/or Trust Assets) and will pay in full each Class of Securities
by its Final Distribution Date regardless of the rate of prepayment of the Mortgage
Loans underlying the Trust Assets.
VI-3-5
(w)
The Sponsor has obtained CUSIP Numbers for each Class of Securities.
SECTION 5. Covenants of the Sponsor. Subject to the conditions set forth in Section 8, the
Sponsor hereby covenants and agrees as follows:
(a)
The Sponsor shall create, no later than the Pool Information Date, the Final Data
Statement, the final version of which will be attached to the SMBS Trust
Agreement related to a Ginnie Mae SMBS Trust.
(b)
[Reserved.]
(c)
On or before the Pool Wire Date, the Sponsor shall transfer (or cause to be
transferred) the Trust Assets of a Ginnie Mae SMBS Trust and the assets
consisting of the Trustee Fee to the Trustee Limited Purpose Account and/or Trust
Asset Depository Account, where they will be held on behalf of the Sponsor and
its Participating Affiliates, as applicable, until closing. The Sponsor and its
Participating Affiliates, as applicable, shall release the foregoing assets to the
Trustee on the Closing Date.
(d)
The Sponsor shall calculate the original issue discount, if any, for each Class. In
addition, the Sponsor shall deliver a list showing the initial offering price to the
public at which the first substantial amount of Securities of each Class will have
been sold, assuming that preliminary indications of interest are confirmed upon
delivery of the Offering Circular Supplement and that such sales are
consummated, or an estimate of the sales price to Trust Counsel and Tax
Administrator on or before the date on which the Offering Circular Supplement is
printed. Within ten Business Days after the Closing Date, the Sponsor shall
provide the Tax Administrator with any additional information concerning the
Securities that the Tax Administrator reasonably may require.
(e)
On or before the Closing Date, the Sponsor shall transfer to a special purpose
account of the Trustee sufficient funds to pay the Ginnie Mae Guaranty Fee and
the fees and expenses of any Participant who is to be paid from the proceeds of the
transaction.
(f)
The Sponsor shall use its best efforts to satisfy each of the conditions to Ginnie
Mae’s obligations under the Sponsor Agreement.
(g)
The Sponsor shall provide or cause to be provided or shall make available in
electronic form a copy, which may be in electronic form, of the Offering Circular
Supplement to each and every Person who purchases or otherwise acquires a
Security from the Sponsor (including any underwriter of the Securities) prior to or
simultaneously with the confirmation of sale of such Security to such Person and
shall comply with the guidelines issued from time to time by The Securities
Industry and Financial Markets Association relating to the distribution by
“Government Sponsored Enterprises” of offering materials related to securities
exempt from registration under the Securities Act of 1933 (the “GSE Guidelines”)
and shall comply with any applicable federal or state laws relating to the
VI-3-6
distribution, offer or sale of any Security. In connection with its compliance with
the GSE Guidelines, the Sponsor shall amend its master agreement with each of its
dealers in a letter substantially in the form attached as Exhibit 1.
(h)
No Security shall be offered, sold or otherwise transferred by the Sponsor (or any
other underwriter of any such Class) to any investor, unless such investor is an
institutional “accredited investor,” as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D of the Securities Act of 1933, as amended (an “Institutional
Accredited Investor”), that has substantial experience in mortgage-backed
securities and is capable of understanding and is able to bear the risks associated
with an investment in such a Security. In addition, the Sponsor shall inform all
other broker/dealers to whom it has agreed to sell a Security at the Closing Date
that such Security is not intended to be distributed to any investor other than an
Institutional Accredited Investor.
(i)
The information concerning Trust Assets to be included in the Final Data
Statement, including, but not by way of limitation, the outstanding principal
balance of each Trust Asset as of the Closing Date and the Certificate Rate of each
Trust Asset, will be true and correct in all material respects as of the Closing Date.
(j)
The Sponsor shall transfer or cause to be transferred to the SMBS Trust, Trust
Assets with the characteristics identified in the Offering Circular Supplement. If
the characteristics of the Trust Assets transferred to the SMBS Trust are such that
there is a material change in the investment characteristics of any Class as
described in the Offering Circular Supplement, the Sponsor shall
(k)
(1)
deliver or cause to be delivered to Ginnie Mae and the Financial Advisor,
for posting on e-Access, a Supplemental Statement, in substantially the
form attached as Exhibit 2,
(2)
deliver or cause to be delivered to the Financial Advisor promptly after the
closing an electronic file of the Supplemental Statement described in
Section 5(j)(1) hereof, and
(3)
notify each person with whom the Sponsor has entered into an agreement
for the purchase of any Securities of any applicable Class (a “Purchaser”)
of the material change in the investment characteristics of the related Class
and confirm to Ginnie Mae, in a letter substantially in the form attached as
Exhibit 3, that either (A) the Purchaser’s decision to purchase the
Securities of an applicable Class was not affected by such variance or (B)
the terms of the sale to the Purchaser were revised to the Purchaser’s
satisfaction.
In connection with any sale of a Security to a customer, the Sponsor shall have
reasonable grounds for believing that the proposed investment is suitable, in
accordance with the NASD Conduct Rules, for such customer.
VI-3-7
(l)
The Sponsor shall deliver or cause to be delivered to the Information Agent, no
later than the Pool Information Date, one copy of each Underlying Certificate
Disclosure Document if one or more Underlying Certificates are held in the Ginnie
Mae SMBS Trust and one copy of each Underlying SMBS Security Disclosure
Document if one or more Underlying SMBS Securities are held in the Ginnie Mae
SMBS Trust.
SECTION 6. Representations and Warranties of Ginnie Mae. Ginnie Mae hereby represents and
warrants to the Sponsor as follows:
(a)
Ginnie Mae is a wholly-owned corporate instrumentality of the United States
within the Department of Housing and Urban Development.
(b)
Pursuant to Section 308 of the National Housing Act, 12 U.S.C. § 1723, the
Secretary of HUD has adopted the bylaws of Ginnie Mae. The bylaws provide
that the President, each Vice President and each Assistant Vice President of Ginnie
Mae are severally expressly empowered in the name of Ginnie Mae to sign all
contracts and other documents, instruments, and writings that are required to be
executed by Ginnie Mae in the conduct of its business and affairs.
(c)
Ginnie Mae has the power and authority to make, execute, deliver and perform the
Sponsor Agreement and all the transactions contemplated hereby, including, but
not limited to, the authority to guarantee the timely payment of principal and
interest on the Securities in accordance with the Sponsor Agreement. Ginnie Mae
has taken all necessary action to authorize its execution, delivery and performance
of the Sponsor Agreement. The Sponsor Agreement constitutes the legal, valid
and binding obligation of Ginnie Mae enforceable in accordance with its terms.
(d)
The General Counsel to HUD has opined to the effect that Ginnie Mae has the
authority to guarantee stripped mortgage-backed securities and that such
guaranties will represent general obligations of the United States backed by the
full faith and credit of the United States. The Sponsor, the Trustee, the SMBS
Trust, the Trust Counsel and Holders of the Securities are entitled to rely on that
opinion.
(e)
The execution, delivery and performance of the Sponsor Agreement by Ginnie
Mae do not violate any provision of any existing federal law, regulation or
executive order applicable to Ginnie Mae or any order or decree of any court, or
any mortgage, indenture, contract or other agreement to which Ginnie Mae is a
party or by which it or any significant portion of its properties is bound.
(f)
All payment obligations of Ginnie Mae under the Sponsor Agreement, including
specifically the Ginnie Mae Guaranty, are obligations of the United States backed
by the full faith and credit of the United States.
SECTION 7. Conditions to Obligation of Ginnie Mae. The obligation of Ginnie Mae hereunder to
guarantee the Securities is subject to the following conditions:
VI-3-8
(a)
All of the representations and warranties of the Sponsor under this Sponsor
Agreement shall be accurate as of the Closing Date, and the Sponsor shall have
complied with all of its covenants and obligations under this Sponsor Agreement
as of the Closing Date.
(b)
Ginnie Mae, its Legal Advisor or another authorized agent shall have received the
following documents (collectively, the “Closing Documents”) in such forms as are
agreed upon and acceptable to Ginnie Mae, duly executed and delivered by all
signatories thereto:
(1)
The related SMBS Trust Agreement, substantially in the form provided by
Ginnie Mae, with only such changes to the form as have been approved by Ginnie
Mae.
(2)
A Base Offering Circular and Offering Circular Supplement, in form and
substance acceptable to Ginnie Mae.
(3)
Opinions of Trust Counsel, substantially in the form provided by Ginnie
Mae, with only such changes as have been approved by Ginnie Mae and the
Sponsor.
(4)
An opinion of counsel to the Trustee, substantially in the form provided by
Ginnie Mae, with only such changes as have been approved by Ginnie Mae and
the Sponsor.
(5)
A letter from the Accountants, dated the date of the Offering Circular
Supplement, confirming the accuracy of the numerical information related to the
Trust Assets and the numerical information related to the Securities contained in
the Offering Circular Supplement, substantially in the form provided by Ginnie
Mae and in form and substance satisfactory to Ginnie Mae and the Sponsor.
(6)
A letter from the Accountants, dated the Closing Date, confirming the
numerical information in the Final Data Statement, substantially in the form
provided by Ginnie Mae in form and substance satisfactory to Ginnie Mae and the
Sponsor.
(7)
A certificate from the Trustee, substantially in the form provided by
Ginnie Mae acknowledging acceptance of Trust Assets on behalf of a Ginnie Mae
SMBS Trust.
(8)
Written instructions from the Sponsor to the Trustee regarding amounts to
be remitted to Ginnie Mae in payment of the Ginnie Mae Guaranty Fee and
amounts to be remitted in payment of fees to any Participant who is to be paid
from the proceeds of the transaction.
(c)
The transaction and transaction documents shall be in form and substance
reasonably acceptable to the Legal Advisor and the Financial Advisor, and Ginnie
Mae shall have received written advice to that effect.
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(d)
There shall be no pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body involving the Sponsor, the SMBS
Trust, Ginnie Mae or any other party to the transactions contemplated hereby,
adversely affecting any such transaction, or challenging the validity of or seeking
to enjoin such transaction.
(e)
Ginnie Mae shall have received the Ginnie Mae Guaranty Fee, and any Participant
who is to be paid from the proceeds of the transaction shall have been paid.
(f)
The Sponsor shall have executed a certification and agreement relating to the
absence of fraud on the part of the Sponsor as requested by Ginnie Mae.
(g)
Following the execution of the Sponsor Agreement, (i) nothing shall have occurred
or first come to Ginnie Mae’s knowledge that has caused Ginnie Mae, in its sole
discretion, to determine that completion of the transaction would jeopardize the
integrity of, or otherwise materially and adversely affect, the Ginnie Mae
Multiclass Securities Program and (ii) no Participant shall have been suspended
from participation in the Ginnie Mae Multiclass Securities Program.
(h)
All other terms and conditions of the Sponsor Agreement shall have been fulfilled.
SECTION 8. Conditions to Obligation of Sponsor. The obligation of the Sponsor to perform its
obligations under the Sponsor Agreement is subject to the following conditions:
(a)
Receipt by the Sponsor of the Guaranty Agreement, substantially in the form
provided by Ginnie Mae, duly executed by Ginnie Mae.
(b)
Receipt of the Closing Documents listed in paragraph (b) of Section 7, duly
executed by the parties thereto.
(c)
The satisfaction of all rule-making and notice requirements related to the
transactions contemplated hereunder that are required to be completed prior to the
Closing Date.
(d)
There shall be no pending or threatened action, suit or proceeding before any court
or governmental agency, authority or body involving the Sponsor, an SMBS Trust,
Ginnie Mae or any other party to the transactions contemplated hereby, adversely
affecting any such transaction, or challenging the validity of or seeking to enjoin
such transaction.
(e)
All of the representations and warranties of Ginnie Mae under the Sponsor
Agreement shall be accurate as of the Closing Date.
SECTION 9. Fees and Deposits.
(a)
On the Closing Date, after receiving confirmation from the Accountants and the
Legal Advisor, Trust Counsel will notify the Trustee that the transaction may
close. The Sponsor shall cause funds for payment of the Ginnie Mae Guaranty Fee
VI-3-10
to be made available in accordance with the Closing Flow of Funds Instruction
Letter such that, upon notification by Trust Counsel that the transaction may close
and the Trustee’s wiring of the Security identified in the Closing Flow of Funds
Instruction Letter, the Ginnie Mae Guaranty Fee will be released to the Trustee
and submitted to Ginnie Mae via pay.gov.
(b)
The Sponsor shall pay (i) the fees and expenses of the Trust Counsel and the
Accountants and (ii) the expense of circulating an electronic version of the Base
Offering Circular, if required, and the Offering Circular Supplement for the
transaction, and neither Ginnie Mae nor the Trustee shall have any responsibility
for paying any such fee or expense.
SECTION 10. Indemnification.
(a)
In the event that Ginnie Mae must make any payment pursuant to the Ginnie Mae
Guaranty as a result of the Sponsor’s breach of any of its representations,
warranties, covenants or obligations set forth herein or in an SMBS Trust
Agreement, the Sponsor shall promptly reimburse Ginnie Mae for any payments
made, together with interest thereon for the period from the date of such Ginnie
Mae Guaranty payment through the date of reimbursement at a rate equal to the
rate of interest on three-month United States Treasury securities as of the date of
that Ginnie Mae Guaranty payment.
(b)
In the event that the Sponsor breaches its representations, warranties, covenants or
obligations set forth herein or in an SMBS Trust Agreement, the Sponsor shall
indemnify and hold harmless Ginnie Mae from and against any loss, damages,
penalties, fines, forfeiture, legal fees and related costs, judgments, and other costs
and expenses resulting from any claim, demand, defense or assertion based on or
grounded upon, or resulting from, such breach. Promptly after receipt by Ginnie
Mae of notice of the commencement of any such action, Ginnie Mae will, if a
claim in respect thereof is to be made against the Sponsor, notify the Sponsor in
writing of the commencement thereof, but the omission to so notify the Sponsor
will not relieve the Sponsor from any liability hereunder unless such omission
materially prejudices the rights of the Sponsor. In case any such action is brought
against Ginnie Mae, and Ginnie Mae notifies the Sponsor of the commencement
thereof, the Sponsor will be entitled to participate therein, and to assume the
defense thereof, with counsel satisfactory to Ginnie Mae, and after notice from the
Sponsor to Ginnie Mae of its election so to assume the defense thereof, the
Sponsor will not be liable to Ginnie Mae under this Section for any legal or other
expenses subsequently incurred by Ginnie Mae in connection with the defense
thereof other than reasonable costs of investigation.
(c)
If an indemnification payment is made by the Sponsor to Ginnie Mae as the result
of a breach by the Sponsor of its representation made in paragraph (v) of Section
4, Ginnie Mae will reimburse the Sponsor up to the amount of the payment and
interest thereon at the applicable Certificate Rate, as and only to the extent that
Ginnie Mae is entitled to distributions from an SMBS Trust as a result of a
VI-3-11
payment on the Ginnie Mae Guaranty occasioned by the breach of the
representation included in paragraph (v) of Section 4.
SECTION 11. Notices. All demands, notices, approvals and communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered to or mailed by
registered mail, postage prepaid, or transmitted by any standard form of written telecommunications
and confirmed by a similar mailed writing, as follows:
(a)
If to Ginnie Mae:
a. If to Ginnie Mae:
Government National Mortgage Association
550 Twelfth Street, SW, Third Floor
Washington, D.C. 20024
Attention: President
Telephone: (202) 708-0926
Facsimile: (202) 485-0206
With copies to:
Department of Housing and Urban Development
Office of General Counsel
Room 9254
550 Twelfth Street, SW, Third Floor
Washington, D.C. 20024
Attention: Assistant General Counsel Ginnie Mae/Finance
Telephone: (202) 708-3260
Facsimile: (202) 708-8776
and the Legal Advisor as of the date of the demand, notice,
approval or communication.
(b)
If to the Sponsor or any other Participant, to the address indicated in the Sponsor
Agreement.
Any party may alter the address to which communications or copies are to be sent by giving notice of
such change of address in conformity with the provisions of this Section for the giving of notice.
SECTION 12. Severability of Provisions. Any part, provision, representation or warranty of the
Sponsor Agreement that is prohibited or that is held to be void or unenforceable shall be ineffective
to the extent of such prohibition or unenforceability without invalidating the remaining parts,
provisions, representations or warranties hereof. Any part, provision, representation or warranty of
the Sponsor Agreement that is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining parts, provisions, representations or warranties
hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law,
VI-3-12
the parties hereto waive any provision of law that prohibits or renders void or unenforceable any
provision hereof.
SECTION 13. GOVERNING LAW. THE SPONSOR AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF GINNIE MAE AND THE SPONSOR UNDER THE SPONSOR
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE UNITED STATES OF AMERICA. INSOFAR AS THERE MAY BE NO
APPLICABLE LAW OF THE UNITED STATES, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING REGARD TO CONFLICTS OF LAWS PRINCIPLES)
SHALL BE DEEMED REFLECTIVE OF THE LAWS OF THE UNITED STATES OF
AMERICA, INSOFAR AS TO DO SO WOULD NOT FRUSTRATE THE PURPOSES OF ANY
PROVISION OF THE SPONSOR AGREEMENT OR THE TRANSACTIONS GOVERNED
THEREBY.
SECTION 14. Survival. Each party agrees that its representations, warranties and covenants
herein, and in any certificate or other instrument delivered pursuant hereto, shall be deemed to be
relied upon by the other party, notwithstanding any investigation heretofore or hereafter made by
the other party or on the other party’s behalf, and that the representations, warranties and
covenants made herein or in any such certificate or other instrument shall survive the Closing
Date.
SECTION 15. Miscellaneous.
(a)
The Sponsor Agreement may be executed in two or more counterparts, each of
which when so executed and delivered shall be an original, and all of which
together shall constitute one and the same instrument. The Sponsor Agreement
shall inure to the benefit of and be binding upon the parties thereto and their
respective successors and assigns.
(b)
Any person into which the Sponsor may be merged or consolidated or any person
resulting from a merger or consolidation involving the Sponsor or any person
succeeding to the business of the Sponsor shall be considered the successor of the
Sponsor under the Sponsor Agreement, without the further act or consent of either
party. The Sponsor Agreement cannot be assigned, pledged or hypothecated by
any party without the written consent of the other party to the Sponsor Agreement.
(c)
The Sponsor Agreement supersedes all prior agreements and understandings
relating to the subject matter thereof. Neither the Sponsor Agreement nor any
term thereof may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in the Sponsor
Agreement and these Standard Sponsor Provisions are for purposes of reference
only and shall not limit or otherwise affect the meaning thereof.
SECTION 16. Request for Opinion. The Sponsor hereby requests and authorizes the Trust
Counsel to issue such legal opinions to Ginnie Mae, each SMBS Trust, the Trustee, the Financial
VI-3-13
Advisor or the Legal Advisor as may be required by any and all documents, certificates or
agreements executed in connection with the Sponsor Agreement.
SECTION 17. Adjustment to Size of Offering. The Sponsor may increase or decrease the size of
the offering by 10% of the aggregate principal amount of securities identified in the Sponsor
Agreement upon delivery of a written notice to Ginnie Mae no later than one Business Day prior to
the Pool Wire Date. The Ginnie Mae Guaranty Fee will be adjusted to reflect the increase or
decrease in the size of the transaction. Notwithstanding the foregoing, the size of the transaction after
giving effect to the adjustment may not be less than $1,000,000,000 or such other amount as Ginnie
Mae may approve from time to time.
Exhibit 1
[Sponsor’s Letterhead]
_________ __, 20___
[Dealer Name]
[Dealer Address]
Dear Dealer:
Our records show that your firm has previously executed a Master Agreement with us concerning the
distribution of securities issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”) or
the Federal National Mortgage Association (“Fannie Mae”). This Agreement requires compliance
with the guidelines on Delivery of Offering Materials relating to Securities of GovernmentSponsored Enterprises (“GSE Guidelines”).
[Name of Sponsor] recently has entered into agreements with the Government National Mortgage
Association (“Ginnie Mae”) to distribute its securities. As a result of certification requested in these
agreements, we would like to amend our Master Agreement with you to include in the definition of
the term “issuer” Ginnie Mae.
This letter will serve as the required amendment. By your signature below, you agree to comply with
the GSE Guidelines with respect to securities guaranteed by Ginnie Mae. Please have an authorized
person sign both copies of this letter in the spaces indicated below and return one letter to me in the
enclosed envelope. Retain the other executed letter for your files.
Thank you for your prompt attention to this matter.
Sincerely,
___________________________________________
(Sponsor Name)
VI-3-14
By:________________________________________
Seen and Agreed:
___________________________________________
(Firm Name)
By:________________________________________
(Authorized Signatory)
___________________________________________
(Printed Name of Signatory)
___________________________________________
(Title)
VI-3-15
Exhibit 2
Government National Mortgage Association
Supplemental Statement
Guaranteed Stripped Mortgage-Backed Securities,
Ginnie Mae SMBS Trust [ ]
Reference is made to the Offering Circular Supplement, dated _______ __, 20___, for the Ginnie
Mae SMBS Trust [ ] (the “Offering Circular Supplement”) and the related Base Offering Circular,
dated April 1, 2008 (the “Base Offering Circular and, together with the Offering Circular
Supplement, the “Offering Circular”). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings assigned to them in Appendix II to the Base Offering
Circular.
[Note to Trust Counsel: Insert disclosure regarding any material changes in investment
characteristics of the applicable Classes.]
[
] [ ], 20[ ]
VI-3-16
Exhibit 3
____________ __, 2___
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
Re:
Ginnie Mae Guaranteed Stripped Mortgage-Backed Securities,
Ginnie Mae SMBS Trust [ ]
Ladies and Gentlemen:
We confirm that we [have informed] [will inform] the purchasers from us of the Class __ Securities
that [ ] [Note to Trust Counsel: Insert additional material changes in investment characteristics of
applicable Classes.] [We also [have informed] [will inform] such purchasers that a Supplemental
Statement reflecting such material changes in investment characteristics will be posted to e-Access.]
Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in
the Base Offering Circular for Ginnie Mae Guaranteed Stripped Mortgage-Backed Securities, April
1, 2008 Edition.
[The persons at each of the purchasers with whom we ordinarily negotiate trades have each informed
us that either (A) the purchaser’s decision to purchase the Class __ Securities has not been affected
by [ ] [Note to Trust Counsel: Insert additional material changes in investment characteristics of
applicable Classes.] or (B) the terms of the sale to the purchaser have been revised to the purchaser’s
satisfaction.] [As of today, no part of the Class _____ Securities has been sold.] [Note to Trust
Counsel: Use preceding bracketed language when the affected securities have not been sold.]
We acknowledge that you are agreeing to proceed with the closing of Ginnie Mae SMBS Trust [ ]
upon reliance upon the representations in this certificate.
[SPONSOR]
By: _____________________________________
[Title of Signatory]
VI-3-17
FORM OF SPONSOR AGREEMENT FOR SMBS TRANSACTIONS
SPONSOR AGREEMENT
GINNIE MAE SMBS TRUST 20[ ]-[ ]
THIS SPONSOR AGREEMENT is entered into as of ___________ __, 20___, by and between the
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (“Ginnie Mae”) and ___________,
a(n) ___________ corporation (the “Sponsor”) in connection with the issuance by the Ginnie Mae
SMBS Trust [ ] of approximately $__________ aggregate principal amount of Securities.
SECTION 1. Standard Sponsor Provisions.
The parties acknowledge and agree that the terms of the Standard Sponsor Provisions for Guaranteed
Stripped Mortgage-Backed Securities, April 1, 2008 Edition, are herein incorporated by reference
and constitute part of this Sponsor Agreement as if set forth herein in full.
SECTION 2. Dates.
The Pool Information Date shall be __________ __, 20___; the Pool Wire Date shall be
___________ __, 20___; and the Closing Date shall be ____________ __, 20___. These dates may
not be changed without the written approval of Ginnie Mae.
SECTION 3. Fees.
Based upon the information regarding the Securities set forth in the Offering Circular Supplement,
the Ginnie Mae Guaranty Fee will be $____________ but will be adjusted if the size of the
transaction increases or increases. [Note to Trust Counsel: The Ginnie Mae Guaranty Fee is an
amount that equals the product of 0.03125% and the aggregate Class Principal Balance of the
Securities as of the Closing Date. The minimum deal size of an SMBS issuance is $1,000,000,000.]
SECTION 4. Notices.
Sponsor:
Attention:
Telephone:
Telecopy:
VI-4-1
Participating Affiliate(s)
of the Sponsor:
Attention:
Telephone:
Telecopy:
Trust Counsel:
Attention:
Telephone:
Telecopy:
Accountants:
Attention:
Telephone:
Telecopy:
VI-4-2
Trustee:
Attention:
Telephone:
Telecopy:
Trustee’s Counsel:
Attention:
Telephone:
Telecopy:
VI-4-3
IN WITNESS WHEREOF, the parties have caused this Sponsor Agreement to be executed and
delivered by their duly authorized representatives as of the day and year first above written.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
By:
Its:
[
], as Sponsor
By:
Its:
VI-4-4
BASE OFFERING CIRCULAR FOR SMBS TRANSACTIONS
VI-5-0
SMBS Base Offering Circular
April 1, 2008
Government National Mortgage Association
GINNIE MAE®
Guaranteed Stripped Mortgage-Backed Securities
(Issuable in Series)
________________
The Government National Mortgage Association Guaranteed Stripped Mortgage-Backed Securities, which will be
sold from time to time in one or more series, represent interests in separate Ginnie Mae SMBS Trusts established
from time to time. The Government National Mortgage Association (“Ginnie Mae”), a wholly-owned corporate
instrumentality of the United States of America within the U.S. Department of Housing and Urban Development,
guarantees the timely payment of principal and interest on each Class of Securities. The Ginnie Mae Guaranty is
backed by the full faith and credit of the United States of America.
The terms of each Series will be described in an Offering Circular Supplement. Each Trust will be comprised
primarily of (i) “fully modified pass-through” mortgage-backed certificates as to which Ginnie Mae has guaranteed
the timely payment of principal and interest pursuant to the Ginnie Mae I Program or the Ginnie Mae II Program, (ii)
certificates backed by Ginnie Mae MBS Certificates as to which Ginnie Mae has guaranteed the timely payment of
principal and interest pursuant to the Ginnie Mae Platinum Program, (iii) REMIC or comparable mortgage
certificates, or (iv) previously issued Ginnie Mae Guaranteed Stripped Mortgage-Backed Securities (“SMBS
Securities”), in each case, evidencing interests in trusts consisting primarily of direct or indirect interests in Ginnie
Mae Certificates, as further described in the related Offering Circular Supplement. The mortgage loans underlying
the Ginnie Mae Certificates consist of one- to four-family residential mortgage loans that are insured or guaranteed
by the Federal Housing Administration (“FHA”), the U.S. Department of Veterans Affairs (“VA”), the U.S.
Department of Housing and Urban Development (“HUD”) or the Rural Development, formerly the Farmers Home
Administration. See “The Ginnie Mae Certificates.”
Each Series will be issued in two or more Classes. Each Class of Securities of a Series will evidence an interest in
future principal payments and/or an interest in future interest payments on the Trust Assets included in the related
Trust.
The Ginnie Mae Guaranty of timely payment of principal and interest is not a guarantee of any particular rate of
principal prepayments with respect to the Mortgage Loans underlying the Trust Assets.
The Trust created for each issue of SMBS Securities will be classified as a grantor trust, and not as a partnership, an
association taxable as a corporation, a taxable mortgage pool, or a real estate mortgage investment conduit, for U.S.
federal income tax purposes, unless an alternative characterization is discussed in the Offering Circular Supplement.
See “Certain U.S. Federal Income Tax Consequences” in this Base Offering Circular.
VI-5-1
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION GUARANTEES THE TIMELY
PAYMENT OF PRINCIPAL AND INTEREST ON THE SECURITIES. THE GINNIE MAE
GUARANTY IS BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES OF
AMERICA. THE SECURITIES ARE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT OF 1933 AND CONSTITUTE EXEMPTED SECURITIES UNDER THE
SECURITIES EXCHANGE ACT OF 1934.
Offers of the Securities may be made through one or more different methods, including offerings through a
Sponsor, as more fully described in the related Offering Circular Supplement. This Base Offering Circular
may not be used to consummate sales of Securities unless you have received the related Offering Circular
Supplement.
The date of this Base Offering Circular is April 1, 2008
.
VI-5-2
OFFERING CIRCULAR SUPPLEMENT
The Offering Circular Supplement relating to the Securities (or separate Classes of Securities) of a
Series to be offered under this Offering Circular will, among other things, set forth with respect to
those Securities, as appropriate: (a) information about the assets comprising the related Trust; (b) a
description of each Class of Securities in that Series and the applicable Interest Rate to be passed
through to Holders of Securities of those Classes; (c) the Original Class Principal Balance or original
Class Notional Balance of each of those Classes; (d) the description of the allocation of principal, if
any, to be distributed on each of those Classes on each Distribution Date; (e) additional information
about the plan of distribution of those Securities; and (f) information about the Trustee.
DEFINED TERMS
Capitalized terms used in this Base Offering Circular and any Offering Circular Supplement shall
have the meanings assigned in the glossary included in Appendix II, unless otherwise specified.
Capitalized terms used only in “Certain U.S. Federal Income Tax Consequences” in this Base
Offering Circular and in the Offering Circular Supplement will be defined within those sections.
This Base Offering Circular, together with the Offering Circular Supplement for each Series,
constitutes an offer to sell only that Series of Securities. No broker, dealer, salesperson, or other
person has been authorized to provide any information or to make any statements or representations
other than those contained in this Base Offering Circular and the related Offering Circular
Supplement. Investors must not rely upon any other such information, statements or representations.
Neither this Base Offering Circular nor any Offering Circular Supplement constitutes an offer to sell
or a solicitation of an offer to buy any Securities in any jurisdiction in which such an offer or
solicitation would be unlawful.
VI-5-3
TABLE OF CONTENTS
Page
DESCRIPTION OF THE SECURITIES .........................................................................................8
General.........................................................................................................................................8
Forms of Securities; Book-Entry Procedures ..............................................................................8
Eligible Investors .........................................................................................................................8
Standard Definitions and Abbreviations for Classes and Components .......................................9
Distributions.................................................................................................................................9
Method of Distributions.............................................................................................................10
Exchange of Certain Classes of SMBS Securities for other SMBS Securities .........................10
Exchange of SMBS Securities for Ginnie Mae Certificates......................................................11
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION..........................................12
GINNIE MAE GUARANTY ........................................................................................................12
THE GINNIE MAE CERTIFICATES ..........................................................................................12
General.......................................................................................................................................12
The VA Loan Program ..............................................................................................................14
The FHA Insurance Programs ...................................................................................................15
The RD Loan Program...............................................................................................................15
The HUD Loan Program............................................................................................................15
UNDERLYING CERTIFICATES.................................................................................................15
UNDERLYING SMBS SECURITIES ..........................................................................................16
FINAL DATA STATEMENTS.....................................................................................................16
YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS ...........................................17
General.......................................................................................................................................17
Payment Delay...........................................................................................................................17
Assumability of Government Loans ..........................................................................................17
Standard Prepayment Assumption Models................................................................................17
THE TRUSTS................................................................................................................................18
Certain Policies of the Trusts.....................................................................................................18
Amendment................................................................................................................................18
The Trustee ................................................................................................................................19
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.................................................19
General.......................................................................................................................................19
Characterization of Trusts and SMBS Securities ......................................................................20
Stripped Bonds and Stripped Coupons ......................................................................................21
Accrual of OID ..........................................................................................................................22
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Qualified Stated Interest ............................................................................................................23
Administrative Expenses ...........................................................................................................24
Special Tax Characteristics of SMBS Securities.......................................................................24
Combinations of SMBS Securities ............................................................................................24
Exchanges of SMBS Securities .................................................................................................24
Sales and other Dispositions of SMBS Securities .....................................................................25
Information Reporting and Backup Withholding ......................................................................25
Non-U.S. Persons.......................................................................................................................25
STATE TAX CONSIDERATIONS ..............................................................................................26
MARGINABILITY; REPURCHASE AGREEMENTS ...............................................................27
ERISA CONSIDERATIONS ........................................................................................................27
LEGAL INVESTMENT CONSIDERATIONS ............................................................................28
SECONDARY MARKET .............................................................................................................28
Exhibit 1
Form of Issuance Statement
VI-5-5
RISK FACTORS
You should purchase securities only if you understand and are able to bear the associated risks.
The risks applicable to your investment depend on the principal and interest type of your
securities. This section highlights certain of these risks.
The rate of principal payments on the
underlying mortgage loans will affect the
rate of principal payments on your
securities. The rate at which you will
receive principal payments will depend
largely on the rate of principal payments,
including prepayments, on the mortgage
loans underlying the trust asset. We expect
the rate of principal payments on the
underlying mortgage loans to vary.
Borrowers generally may prepay their
mortgage loans at any time without penalty.
Rates of principal payments can
reduce your yield. The yield on your
securities probably will be lower than you
expect if:
•
you bought your securities at a
premium (interest only securities, for
example) and principal payments are
faster than you expected, or
•
you bought your securities at a
discount (principal only securities,
for example) and principal payments
are slower than you expected.
In addition, if your securities are
interest only securities or securities
purchased at a significant premium, you
could lose money on your investment if
prepayments occur at a rapid rate.
An investment in the securities is
subject to significant reinvestment risk.
The rate of principal payments on your
securities is uncertain. You may be unable
to reinvest the payments on your securities
at the same returns provided by the
securities. Lower prevailing interest rates
may result in an unexpected return of
principal. In that interest rate climate,
higher yielding reinvestment opportunities
may be limited.
Conversely, higher
prevailing interest rates may result in slower
returns of principal and you may not be able
to take advantage of higher yielding
investment opportunities. The final payment
on your security may occur much earlier
than the final distribution date.
The securities may not be a suitable
investment for you. The securities are not
suitable investments for all investors.
In addition, although each of the
sponsor and co-manager(s), if any, intends
to make a market for the purchase and sale
of the securities after their initial issuance, it
has no obligation to do so. There is no
assurance that a secondary market will
develop, that any secondary market will
continue, or that the price at which you can
sell an investment in any class will enable
you to realize a desired yield on that
investment.
You will bear the market risks of your
investment. The market values of the
classes are likely to fluctuate.
These
fluctuations may be significant and could
result in significant losses to you.
The secondary markets for mortgagerelated securities have experienced periods
of illiquidity and can be expected to do so in
the future. Illiquidity can have a severely
adverse effect on the prices of classes that
are especially sensitive to prepayment or
interest rate risk or that have been structured
to meet the investment requirements of
limited categories of investors.
You are encouraged to consult advisors
regarding an investment in the securities.
You should not purchase the securities of
any class unless you understand and are able
to bear the prepayment, yield, liquidity and
market risks associated with that class.
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An investor’s ability to exchange
securities for other securities issued by the
trust will be limited by a number of factors.
A beneficial owner must, at the time of a
proposed exchange, own the appropriate
classes of securities in the appropriate
proportions in order to effect a desired
exchange. A beneficial owner that does not
own the appropriate classes or the
appropriate proportions of such classes may
not be able to obtain the necessary class or
classes of securities in the secondary market.
The beneficial owner of a needed class may
refuse or be unable to sell at a reasonable
price or any price, or certain classes may
have been purchased and placed into other
financial structures. Furthermore, principal
distributions will, over time, diminish the
amounts available for exchange.
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DESCRIPTION OF THE SECURITIES
General
Ginnie Mae guarantees the timely payment of principal and interest on the Securities. The full faith
and credit of the United States of America stands behind each Ginnie Mae Guaranty. Pursuant to an
SMBS Trust Agreement, dated as of the related Closing Date, between the Sponsor and the Trustee,
a separate Trust will issue each Series of Ginnie Mae SMBS Securities.
Forms of Securities; Book-Entry Procedures
Each SMBS Security will be issued and maintained in book-entry form through the book-entry
system of the U.S. Federal Reserve Banks (the “Fedwire Book-Entry System”). Each SMBS
Security initially will be registered in the name of the Federal Reserve Bank of New York (together
with any successor or other depository selected by Ginnie Mae, the “Book-Entry Depository”).
The Fedwire Book-Entry System is an electronic facility operated by the U.S. Federal Reserve Banks
for maintaining securities accounts and for effecting transfers. The Fedwire Book-Entry system is a
real-time, delivery-versus-payment, gross settlement system that allows for the simultaneous transfer
of securities against payment. The Fedwire Book-Entry System is used to clear, settle and pay not
only Ginnie Mae Securities, but also all U.S. Treasury marketable debt instruments, the majority of
book-entry securities issued by other government agencies and government sponsored enterprises
and the mortgage-backed securities issued by the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation.
Beneficial ownership of an SMBS Security will be subject to the rules and procedures governing the
Book-Entry Depository and its participants as in effect from time to time. The Book-Entry
Depository will maintain evidence of the interests of its participants in any SMBS Security by
appropriate entries in the Book-Entry Depository’s books and records. Only participants of the
Fedwire Book-Entry System are eligible to maintain book-entry accounts directly with the BookEntry Depository. A Beneficial Owner that is not a participant of the Fedwire Book-Entry System
generally will evidence its interest in an SMBS Security by appropriate entries in the books and
records of one or more financial intermediaries. A Beneficial Owner of an SMBS Security must rely
upon these procedures to evidence its beneficial ownership, and may transfer its beneficial ownership
only if it complies with the procedures of the appropriate financial intermediaries. Correspondingly,
a Beneficial Owner of an SMBS Security must depend upon its financial intermediaries (including
the Book-Entry Depository, as Holder) to enforce its rights with respect to an SMBS Security.
SMBS Securities will not be issued in certificated form.
Unless otherwise noted in the applicable Offering Circular Supplement, each Trust will issue
Securities, in minimum dollar denominations representing initial principal or notional balances of
$100,000 and integral multiples of $1 in excess of $100,000.
Eligible Investors
An SMBS Security is a class of security deemed to be a suitable investment only for an institutional
Accredited Investor that has substantial experience in mortgage-backed securities and that is capable
VI-5-8
of understanding, and is able to bear, the risks associated with an investment in a class such as an
SMBS Security.
Standard Definitions and Abbreviations for Classes and Components
Classes of Securities are categorized according to “Principal Types” and “Interest Types.” The chart
attached as Appendix I identifies the standard abbreviations for most of these categories. Definitions
of Class Types may be found in Appendix II. The first column of the chart shows the standard
abbreviation for each Class Type. Each Offering Circular Supplement will identify the category of
Classes of the related Securities by means of one or more of these abbreviations.
Distributions
Each month, the Trustee for a Series shall calculate the amount of principal and interest distributable
on the Securities on the Distribution Date. The Distribution Amount for each Series for any related
Distribution Date will equal the sum of the Principal Distribution Amount, and the Interest
Distribution Amount for that Series.
In the case of Trust MBS, the Trustee will determine the amount of principal expected to be received
on each Trust MBS during that month on the basis of Certificate Factors for those Trust MBS for that
month. The Trustee will obtain the Certificate Factors from the Information Agent on the seventh
Business Day of the month in the case of Ginnie Mae I Certificates and Ginnie Mae II Certificates
(the “Certificate Factor Date”). For any Trust MBS (other than Trust MBS that consist of Ginnie
Mae Platinum Certificates) for which a Certificate Factor is not available on the Certificate Factor
Date, the Trustee will determine a Calculated Certificate Factor.
In the case of Underlying Certificates or Underlying SMBS Securities, the Trustee will determine the
amount of principal expected to be received on each Underlying Certificate or Underlying SMBS
Security, as applicable, during that month on the basis of the Underlying Certificate Factor for such
Underlying Certificate or Underlying SMBS Security for that month. The Trustee will obtain the
Underlying Certificate Factors in accordance with the related SMBS Trust Agreement. In the event
that an Underlying Certificate Factor is not available on the date specified in the related SMBS Trust
Agreement, no amounts in respect of principal for the related Underlying Certificate will be
distributable to the related Securities on the following Distribution Date.
The Series Factor for each Distribution Date will reflect the Certificate Factors and/or the Calculated
Certificate Factors for that month (or, in the case of Underlying Certificates or Underlying SMBS
Securities, the amount of principal distributable thereon on the preceding Underlying Certificate
Payment Date) or Underlying SMBS Security Payment Date). Amounts calculated by the Trustee
based on the Series Factors will be distributed to Holders of Securities on the applicable Distribution
Date, whether or not those amounts are actually received on the Trust Assets.
Each Series Factor is the factor (carried to eight decimal places) that, when multiplied by the Original
Class Principal Balance (or the original Class Notional Balance) of any Class in the related Series,
determines the Class Principal Balance (or Class Notional Balance) of such Class after giving effect
to the distribution of principal to be made on the Securities on the related Distribution Date. The
Information Agent identified in the Offering Circular Supplement will post the Series Factor, along
with the Interest Rate for each Class, on e-Access.
VI-5-9
For any Distribution Date, investors can calculate the amount of principal to be distributed on any
Class by multiplying the Original Class Principal Balance of that Class by the difference between the
Series Factor for the preceding and current months. The amount of interest to be distributed on any
interest-bearing Class on each Distribution Date will equal 30 days’ interest at the Interest Rate for
that Class on its Class Principal Balance (or Class Notional Balance) as determined by the Series
Factor for the preceding month.
Method of Distributions
Distributions of principal and interest (or, where applicable, of principal only or interest only) on a
Series will be made on each Distribution Date for that Series to the Persons in whose names the
Securities are registered on the related Record Date.
The Book-Entry Depository will make distributions on the SMBS Securities, and Beneficial Owners
of SMBS Securities will receive distributions, through credits to accounts maintained on the books
and records of appropriate financial intermediaries (including the Federal Reserve Bank of New
York as Holder) for the benefit of those Beneficial Owners.
Exchange of Certain Classes of SMBS Securities for other SMBS Securities
All or a portion of the interests in a series of SMBS Securities may be exchanged for a proportionate
interest in one or more other SMBS Securities, as provided in the applicable Offering Circular
Supplement. This process may occur repeatedly.
Unless otherwise specified in the Offering Circular Supplement, the SMBS Securities issued in the
exchange may be exchanged back into SMBS Securities of the related Series so long as the SMBS
Securities represent identical Percentage Interests in the principal and interest entitlements of the
Classes of SMBS Securities that were surrendered.
The Classes of SMBS Securities that are outstanding at any given time, and the outstanding Class
Principal Balances or Class Notional Balances of such Classes, will depend upon principal
distributions of such Classes as well as any exchanges that occur.
Any exchange of SMBS Securities within a Series will be permitted, so long as the following criteria
are met:
a) The aggregate principal balance (exclusive of any notional balance) of the Securities
received must equal that of the Securities surrendered (except for de minimis
differences due to rounding).
b) The aggregate monthly principal and interest entitlements on the Securities received
must equal that of the Securities surrendered (except for de minimis differences due
to rounding).
At any given time, a Beneficial Owner’s ability to exchange SMBS Securities for other SMBS
Securities will be limited by a number of factors. A Beneficial Owner must, at the time of the
proposed exchange, own the appropriate Classes in the appropriate proportions in order to effect a
desired exchange. A Beneficial Owner that does not own the appropriate Classes or the appropriate
VI-5-10
proportions of such Classes may not be able to obtain the necessary Class or Classes of SMBS
Securities in the secondary market. The Beneficial Owner of a needed Class may refuse or be unable
to sell at a reasonable price or any price, or certain Classes may have been purchased and placed into
other financial structures. Principal distributions will, over time, diminish the amounts available for
exchange. In addition, SMBS Securities issued in exchange for other SMBS Securities may be
issued only in the minimum denominations specified above.
A Beneficial Owner proposing to effect an exchange must so notify the Trustee through the
Beneficial Owner’s Book-Entry Depository participant. The procedures for effecting exchanges of
SMBS Securities are described in “Description of the Securities–Exchange Procedures” in the related
Offering Circular Supplement.
The Securities to be exchanged must be in the correct exchange proportions. The Trustee will verify
that the proposed proportions ensure that the principal and interest entitlements of the Securities
received equal such entitlements of the Securities surrendered. If there is an error, the exchange will
not occur until such error is corrected. Unless rejected for error, the notice of exchange will become
irrevocable two Business Days prior to the proposed exchange.
The first distribution on an SMBS Security received in an exchange will be made on the Distribution
Date in the month following the month of the exchange. Such distribution will be made to the
Holder of record as of the Record Date in the month of exchange.
Exchange of SMBS Securities for Ginnie Mae Certificates
For any series of SMBS Securities evidencing an interest in a single Ginnie Mae Certificate, Classes
of outstanding SMBS Securities representing identical Percentage Interests in the principal and
interest entitlements may be exchanged for a comparable portion of the related Ginnie Mae
Certificate. The total outstanding Principal Balance of the Ginnie Mae Certificates of authorized
denominations delivered in any such exchange will equal the total outstanding Class Principal
Balance of the SMBS Securities surrendered for exchange. An administrative fee will be imposed
for the exchange of the SMBS Securities for Ginnie Mae Certificates if and as provided in the related
Offering Circular Supplement.
Unless otherwise specified in the offering Circular Supplement, the Ginnie Mae Certificates
surrendered in the exchange may be exchanged back into SMBS Securities of the related Series so
long as the SMBS Securities represent identical Percentage Interests in the principal and interest
entitlements of the Ginnie Mae Certificates to be exchanged.
At any given time, a Beneficial Owner’s ability to exchange SMBS Securities for Ginnie Mae
Certificates will be limited by a number of factors. A Beneficial Owner that does not own the
requisite amount of Classes of SMBS Securities may not be able to obtain the necessary Class or
Classes in the secondary market. The Beneficial Owner of a needed Class may refuse or be unable to
sell at a reasonable price or any price, or certain Classes may have been purchased and placed into
other financial structures. Principal distributions will, over time, diminish the amounts available for
exchange.
A Beneficial Owner proposing to effect an exchange must so notify the Trustee through the
Beneficial Owner’s Book-Entry Depository Participant. The procedures for effecting exchanges of
VI-5-11
SMBS Securities for Ginnie Mae Certificates are described in “Description of the SecuritiesExchange Procedures” in the related Offering Circular Supplement.
The first distribution in respect of the Ginnie Mae Certificates received in an exchange will be made
on the Ginnie Mae Certificate Payment Date following the month of the exchange. Such distribution
will be made to the Holder of record as of the Record Date in the month of exchange.
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
The Government National Mortgage Association is a wholly-owned corporate instrumentality of the
United States within the Department of Housing and Urban Development. Section 306(g) of Title III
of the National Housing Act of 1934, as amended (the “Housing Act”), authorizes Ginnie Mae to
guarantee the timely payment of the principal of, and interest on, certificates or securities that are
based on and backed by a pool of mortgage loans insured by the Federal Housing Administration
under the Housing Act (each, an “FHA Loan”), Rural Development under Title V of the Housing
Act of 1949 (each, an “RD Loan”), the U.S. Department of Veterans Affairs under the Servicemen’s
Readjustment Act of 1944, as amended, or HUD under Section 184 of the Housing and Community
Development Act of 1992 (each, a “HUD Loan”), or guaranteed under Chapter 37 of Title 38, United
States Code (each, a “VA Loan” and, together with FHA Loans, RD Loans and HUD Loans,
“Government Loans”).
Section 306(g) of the Housing Act provides that “the full faith and credit of the United States is
pledged to the payment of all amounts which may be required to be paid under any guaranty under
this subsection.” To meet its obligations under its guaranties, Ginnie Mae is authorized, under section
306(d) of the Housing Act, to borrow from the U.S. Treasury with no limitations as to amount.
GINNIE MAE GUARANTY
Ginnie Mae guarantees the timely payment of principal and interest on each Class of Securities (in
accordance with the terms of those Classes as specified in the related Offering Circular Supplement).
The Ginnie Mae Guaranty is backed by the full faith and credit of the United States of America.
THE GINNIE MAE CERTIFICATES
General
The Trust Assets for a Series of Securities may include Ginnie Mae Certificates conveyed by the
related Sponsor to a Trust pursuant to the terms and conditions of the SMBS Trust Agreement.
The Sponsor will represent and warrant in the SMBS Trust Agreement that the information set forth
in the Offering Circular Supplement and Final Data Statement including the principal balance and
Certificate Rate for each Trust MBS as of the Closing Date, is true and correct as of the Closing
Date. If this representation and warranty is untrue for any Trust MBS, the Sponsor, at its option, may
(a) cure the breach, (b) substitute another Ginnie Mae Certificate for the affected Trust MBS, or (c)
with Ginnie Mae’s consent, repurchase the affected Trust MBS from the Trust, in each case only to
the extent permitted under the SMBS Trust Agreement.
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The Mortgage Loans underlying the Trust MBS will consist of Government Loans secured by first
lien mortgages on single-family residential properties including condominiums, including levelpayment mortgage loans and “buy down” mortgage loans. All mortgages underlying a particular
Trust MBS must be of the same type (for example, all level-payment single-family mortgages).
Ginnie Mae will have guaranteed the timely payment of principal and interest on each Trust MBS in
accordance with a Certificate Guaranty Agreement or a Ginnie Mae Platinum Guaranty Agreement,
as the case may be.
Ginnie Mae guarantees the timely payment of principal of and interest on each Trust MBS, and this
obligation is backed by the full faith and credit of the United States. Each Trust MBS will have an
original maturity of not more than 30 years. Each Ginnie Mae MBS Certificate will be based on and
backed by a pool of Government Loans and will provide for the payment to the registered holder of
that Ginnie Mae MBS Certificate of monthly payments of principal and interest equal to the
aggregate amount of the scheduled monthly principal and interest payments on the Government
Loans underlying that Ginnie Mae MBS Certificate, less applicable servicing and guaranty fees
totaling between 0.25% and 1.50% per annum of the outstanding principal balance. In addition, each
payment will include any prepayments and other unscheduled recoveries of principal of the
Government Loans underlying that Ginnie Mae MBS Certificate.
Each Ginnie Mae Issuer will perform the routine functions required for servicing of Government
Loans and Ginnie Mae MBS Certificates for which it is responsible, including mortgagor billings,
receipt and posting of payments, payment of property taxes and hazard insurance premiums,
remittance, collections and customer service. Each Ginnie Mae Issuer will be obligated under its
Certificate Guaranty Agreements with Ginnie Mae to service the pooled Government Loans in
accordance with FHA, RD or VA requirements, as applicable, and with generally accepted practices
in the mortgage lending industry. Each Ginnie Mae Issuer’s responsibilities with respect to the
pooled Government Loans will include collection of all principal and interest payments and
payments made by borrowers toward escrows established for taxes and insurance premiums;
maintenance of necessary hazard insurance policies, institution of all actions necessary to foreclose
on, or take other appropriate action with respect to, loans in default; and collection of insurance and
guaranty benefits.
The Trust Asset Depository or its nominees, as registered holder (on behalf of the Trustee) of the
related Trust MBS, will have the right to proceed directly against Ginnie Mae under the terms of the
related Trust MBS for any amounts that are not paid when due.
Ginnie Mae Certificates are issued under either the Ginnie Mae I Program, the Ginnie Mae II
Program or the Ginnie Mae Platinum Program.
Under the Ginnie Mae I Program, Ginnie Mae I Certificates are issued and marketed by a single
Ginnie Mae Issuer that has assembled a pool of current mortgage loans (within two years of
issuance) to back those Ginnie Mae I Certificates. All mortgage loans underlying a particular Ginnie
Mae I Certificate must have the same fixed annual interest rate. The per annum pass-through rate on
each Ginnie Mae I Certificate is 50 basis points less than the annual interest rate on the mortgage
loans included in the pool backing the Ginnie Mae I Certificate. Payments of principal and interest
VI-5-13
are made to holders of Ginnie Mae I Certificates on the 15th of each month (or the first Business Day
thereafter).
Under the Ginnie Mae II Program, mortgage pools may be formed by aggregating packages of
current mortgage loans submitted by more than one Ginnie Mae Issuer for a particular issue date and
pass-through rate. The resulting pool, which backs a single issue of Ginnie Mae II Certificates, is
administered by each participating issuer to the extent of the mortgage loans contributed by it to the
pool. Each Ginnie Mae II Certificate issued under a multiple issuer pool, however, is backed by a
proportionate interest in the entire pool (and not just the mortgage loans contributed to the pool by
any one Ginnie Mae Issuer). Ginnie Mae II Certificates may also be backed by a custom pool of
current mortgage loans formed by a single Ginnie Mae Issuer. Payments of principal and interest are
made to holders of Ginnie Mae II Certificates on the 20th of each month or the first Business Day
thereafter by The Bank of New York, the paying and transfer agent for Ginnie Mae II Certificates.
Each Ginnie Mae II Certificate pool consists entirely of fixed rate mortgage loans. Fixed rate
mortgage loans underlying any particular Ginnie Mae II Certificate may have annual interest rates
that vary from each other by up to 1.00% per annum. The per annum pass-through rate on each
Ginnie Mae II Certificate will be between 0.50% and 1.50% per annum, in the case of Ginnie Mae II
Certificates issued prior to July 1, 2003, and will be between 0.25% and 0.75%, in the case of Ginnie
Mae II Certificates issued on or after July 1, 2003, less than the highest annual interest rate per
annum on any mortgage loan included in the pool of mortgage loans backing that Ginnie Mae II
Certificate.
Under the Ginnie Mae Platinum Program, a holder of a number of Ginnie Mae I Certificates with
identical Certificate Rates may deposit them into a trust, and the holder of a number of fixed-rate
Ginnie Mae II Certificates with identical Certificate Rates may deposit them into a trust, and in each
case the depositor will receive a larger denominated Ginnie Mae Platinum Certificate with the same
fixed coupon rate as the underlying Ginnie Mae Certificates. For purposes of this Base Offering
Circular, (a) the term “Ginnie Mae I Certificate” means a Ginnie Mae I MBS Certificate or a Ginnie
Mae Platinum Certificate backed by Ginnie Mae I MBS Certificates, and (b) the term “Ginnie Mae II
Certificate” means a Ginnie Mae II MBS Certificate or a Ginnie Mae Platinum Certificate backed by
fixed-rate Ginnie Mae II MBS Certificates.
The VA Loan Program
VA is an Executive Branch Department of the United States, headed by the Secretary of Veterans
Affairs. VA currently administers a variety of federal assistance programs on behalf of eligible
veterans and their dependents and beneficiaries. VA administers a loan guaranty program pursuant
to which VA guarantees a portion of loans made to eligible veterans.
Under the VA loan guaranty program, a VA Loan may be made to any eligible veteran by an
approved private sector mortgage lender. VA guarantees payment to the holder of that loan of a
fixed percentage of the loan indebtedness, up to a maximum dollar amount, in the event of default by
the veteran borrower. When a delinquency is reported to VA and no realistic alternative to
foreclosure is developed by the loan holder or through VA’s supplemental servicing of the loan, VA
determines, through an economic analysis, whether VA will (a) authorize the holder to convey the
property securing the VA Loan to the Secretary of Veterans Affairs following termination or (b) pay
VI-5-14
the loan guaranty amount to the holder. The decision as to disposition of properties securing
defaulted VA Loans is made on a case-by-case basis using the procedures set forth in 38 U.S.C.
section 3732(c), as amended.
The FHA Insurance Programs
FHA is an organizational unit within the United States Department of Housing and Urban
Development. FHA was established to encourage improvement in housing standards and conditions,
to provide an adequate home financing system by insuring housing mortgages and credit and to exert
a stabilizing influence on the mortgage market. FHA provides insurance for private lenders against
loss on eligible mortgages.
Under the FHA mortgage insurance program, an FHA home mortgage may be made to borrowers
meeting certain credit standards by an approved mortgage lender. FHA insures payment to the
holder of that loan in the event of default by the borrower. Upon default, the lender, depending upon
the circumstances, may (a) assign the mortgage to FHA, (b) acquire (through foreclosure or deed in
lieu of foreclosure) and convey title to FHA or (c) work with the borrower to sell the property before
the foreclosure sale. The lender will receive insurance benefits equal to the unpaid principal balance
of the loan, plus approved expenses.
The RD Loan Program
RD is a division of the United States Department of Agriculture, authorized to insure loans made by
private sector mortgage lenders to low and moderate-income rural families in an amount equal to
90% of the loan. Less than 1% of Ginnie Mae Certificates are backed by RD-insured loans.
The HUD Loan Program
HUD guarantees loans to construct, acquire or rehabilitate one-to-four family dwellings that are
located on trust land in an Indian or Alaska Native area made by lenders approved by FHA,
authorized by VA, approved by the United States Department of Agriculture to make guaranteed
loans under the Housing Act of 1949, and lenders that are supervised, approved, regulated or insured
by any agency of the United States Government. Upon default, the lender, depending upon the
circumstances, may (a) assign the mortgage to the Secretary, (b) acquire (through foreclosure or deed
in lieu of foreclosure) and convey the obligation and security to the Secretary, or (c) work with the
borrower to sell the property. The lender will receive guaranty benefits equal to the unpaid balance
of the loan, plus approved expenses.
UNDERLYING CERTIFICATES
The Trust Assets for a Series of Securities may include one or more Underlying Certificates. Any
such Underlying Certificate will evidence a direct or indirect beneficial ownership interest in a
separate pool of Ginnie Mae Certificates and will have been issued and guaranteed as described in
the Underlying Certificate Disclosure Document. Each Offering Circular Supplement will include a
general description of the characteristics of each Underlying Certificate and will incorporate by
reference the related Underlying Certificate Disclosure Documents. In the event that any issue arises
under the trust agreement that governs the Underlying Trust, which requires a vote of the holders of
the Underlying Certificates, the related trustee will vote the Underlying Certificates in a manner that,
VI-5-15
in its sole judgment, is consistent with the best interests of the holders of such Underlying
Certificates.
Investors in any Security representing an interest in one or more Underlying Certificates are urged to
review, in particular, the related Underlying Certificate Disclosure Documents, which may be
obtained from the Information Agent as described in the related Offering Circular Supplement.
UNDERLYING SMBS SECURITIES
The Trust Assets for a Series of Securities may include one or more Underlying SMBS Securities.
Any such Underlying SMBS Security will evidence a direct or indirect beneficial ownership interest
in a separate pool of Ginnie Mae Certificates, Underlying Certificates or Underlying SMBS
Securities and will have been issued and guaranteed as described in the Underlying SMBS Security
Disclosure Document. Each Offering Circular Supplement will include a general description of the
characteristics of each Underlying SMBS Security and will incorporate by reference the related
Underlying SMBS Security Disclosure Documents. In the event that any issue arises under the trust
agreement that governs the Underlying Trust, which requires a vote of the holders of the Underlying
SMBS Securities, the related trustee will vote the Underlying SMBS Securities in a manner that, in
its sole judgment, is consistent with the best interests of the holders of such Underlying SMBS
Securities.
Investors in any Security representing an interest in one or more Underlying SMBS Securities are
urged to review, in particular, the related Underlying SMBS Security Disclosure Documents, which
may be obtained from the Information Agent as described in the related Offering Circular
Supplement.
FINAL DATA STATEMENTS
On the related Closing Date for each series of SMBS Securities the Sponsor will prepare a Final Data
Statement. A Final Data Statement that is prepared after the related SMBS Securities are issued
should not be considered a disclosure document for that series of SMBS Securities.
In general, each Final Data Statement will include among other things the following information:
• with respect to any Trust MBS included as Trust Assets, the pool number for
each Ginnie Mae Certificate included in the related Trust; and
• with respect to any Underlying Certificates or Underlying SMBS Securities
included as Trust Assets, the Series, Class designation and CUSIP in respect of
such Underlying Certificates or Underlying SMBS Securities.
The Final Data Statement will not accompany this Offering Circular. The Final Data Statement is
available on Ginnie Mae’s website, e-Access, located at http://www.ginniemae.gov. Copies of Final
Data Statements are also available upon request of The Bank of New York, Information Agent, at
(800) 234-GNMA.
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YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS
General
The prepayment experience of the Mortgage Loans underlying the related Trust Assets will affect the
yield realized by investors in the related Securities. Mortgagors may voluntarily prepay their
Mortgage Loan in full or in part at any time without penalty. The rate of principal payments
(including prepayments and payments in respect of liquidations) on the Mortgage Loans generally
depends on a variety of economic, geographic, social and other factors, including prevailing market
interest rates and general economic factors. The rate of prepayments on conventional mortgage loans
has fluctuated significantly in recent years. There is no assurance, however, that prepayment patterns
for the Mortgage Loans will conform to patterns for more traditional types of conventional fixed-rate
mortgage loans. In general, if prevailing mortgage interest rates fall materially below the Mortgage
Rates on the Mortgage Loans (giving consideration to the cost of refinancing), the rate of prepayment
of the Mortgage Loans would be expected to increase. If mortgage interest rates rise materially
above the Mortgage Rates on the Mortgage Loans, the rate of prepayment of the Mortgage Loans
would be expected to decrease. There can be no assurance, however, that prepayments will occur in
accordance with these patterns.
If the prepayment rate on the Mortgage Loans increases during a period of declining interest rates,
investors may receive increased principal distributions at a time when those investors are 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 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 such Securities until the Distribution Date in the month following
the month in which such interest accrues on the Trust Assets.
Assumability of Government Loans
All Government Loans may be assumed upon the sale of the related Mortgaged Property, subject
generally to the purchaser’s compliance with certain then-existing credit requirements and
underwriting guidelines.
Standard Prepayment Assumption Models
Prepayments of Mortgage Loans are commonly measured by a prepayment standard or model. The
models used in the Offering Circular Supplement are the standard prepayment assumption model of
The Securities Industry and Financial Markets Association (“PSA”) and or the constant prepayment
rate (“CPR”) model.
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CPR represents a constant rate of prepayment on the Mortgage Loans each month relative to the then
outstanding aggregate principal balance of the Mortgage Loans for the life of those Mortgage Loans.
PSA represents an assumed rate of prepayment each month relative to the then outstanding principal
balance of the Mortgage Loans to which the model is applied. A prepayment assumption of 100%
PSA assumes prepayment of the then aggregate outstanding principal balances of the Mortgage
Loans in the month following their origination at an annual rate of 0.2% and an additional 0.2% in
each month after that (for example, at an annual rate of 0.4% in the second month) until the thirtieth
month. Beginning in the thirtieth month, and in each month after that, until all of the Mortgage
Loans are paid in full, 100% PSA assumes that the rate of prepayment remains constant at 6% per
annum. A prepayment assumption of 0% PSA assumes no prepayments, and a prepayment
assumption of 200% PSA assumes prepayment rates equal to the product of 2.0 and the 100% PSA
assumed prepayment rates. PSA does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any of the Mortgage Loans.
The actual final distribution on the Securities is likely to be made earlier, and could be made
significantly earlier, than their Final Distribution Date because (i) the rate of distributions on the
Securities will be affected by the actual rate of payment (including prepayments) of principal on the
related underlying Mortgage Loans and (ii) some of the related Mortgage Loans have stated
maturities prior to the weighted average remaining term to maturity of the Mortgage Loans presented
in the Offering Circular Supplement and may have interest rates lower than the weighted average
mortgage rate of the Mortgage Loans presented in the Offering Circular Supplement. However,
there can be no assurance that the final distribution of principal of any Series will be earlier than the
Final Distribution Date specified for such Series in the related Offering Circular Supplement.
No representation is made about the anticipated rate of prepayments or foreclosures on the Mortgage
Loans underlying the Trust Assets or about the anticipated yield to maturity of any Class of
Securities. Investors are urged to base their decisions whether to invest in any Class of Securities
upon a comparison of desired yield to maturity with the yield to maturity that would result based on
the price that the investor pays for the Securities and upon the investor’s own determinations about
anticipated rates of prepayments, foreclosures, substitutions and cash payments by the Sponsor with
respect to the Mortgage Loans.
THE TRUSTS
Certain Policies of the Trusts
No SMBS Trust Agreement will authorize a Trust to engage in any activities other than the issuance
of the related Securities and the purchase, servicing and disposition of the related Trust Assets and
certain related activities. Each SMBS Trust Agreement may be amended only as set forth below
under “— Amendment.”
Amendment
Subject to the limitations set forth below, the Sponsor and the Trustee (with Ginnie Mae’s consent)
may amend any SMBS Trust Agreement for any purpose, without the consent of any Holder,
provided the Trustee receives an Opinion of Counsel to the effect that the proposed amendment will
not result in a significant risk that any related SMBS Trust will lose its status as a grantor trust. For
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that purpose, a significant risk is a risk that would have prevented counsel from giving an unqualified
opinion with respect to the grantor trust status of any related Trust had such amendment been an
original term of the SMBS Trust Agreement. The Sponsor and the Trustee may not amend any
SMBS Trust Agreement, however, if the effect of that amendment would be to alter the timing or
amount of any required distribution of principal or interest (including distributions made pursuant to
the Ginnie Mae Guaranty) to any Holder, or the right of any Holder to institute suit for the
enforcement of any payment, without the consent of each affected Holder.
The Trustee
The Trustee may resign at any time by giving written notice to Ginnie Mae. Upon notice of the
Trustee’s resignation, Ginnie Mae will appoint a successor Trustee. Ginnie Mae also may remove
the Trustee and appoint a successor if the Trustee breaches its obligations under the SMBS Trust
Agreement, if the Trustee ceases to be eligible to continue as the Trustee under the related SMBS
Trust Agreement or if the Trustee becomes incapable of acting, or is adjudged a bankrupt or becomes
insolvent, or a receiver for the Trustee or its property is appointed, or any public officer takes control
of the Trustee or its property for the purpose of rehabilitation, conservation or liquidation of that
property. Any resignation or removal of the Trustee and appointment of a successor Trustee will
become effective only upon the acceptance of the appointment by a successor Trustee.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion, prepared by Ginnie Mae’s Legal Advisor, is a summary of the anticipated
material U.S. federal income tax consequences of the purchase, ownership, and disposition of the
SMBS Securities. The summary is based upon laws, regulations, rulings, and decisions now in
effect, all of which are subject to change. The discussion does not purport to deal with the U.S.
federal income tax consequences to all categories of investors, some of which may be subject to
special rules. The discussion focuses primarily on investors who will hold the SMBS Securities as
“capital assets” (generally, property held for investment) within the meaning of section 1221 of the
Code, although much of the discussion is applicable to other investors as well. You should note that
currently the regulations and any other administrative guidance issued concerning securities like the
SMBS Securities do not directly address many of the issues involved with respect to the tax
treatment of such securities. Although the U.S. Department of the Treasury has issued final
regulations dealing with original issue discount (“OID”) and premium (such regulations, the “OID
Regulations”), the OID Regulations do not address directly the treatment of securities like the SMBS
Securities. Hence, definitive guidance cannot be provided with respect to many aspects of the tax
treatment of investors. Moreover, there can be no assurance that the Internal Revenue Service (the
“Service”) will not take positions that would be materially adverse to investors. Finally, the
summary does not purport to address the anticipated state income tax consequences to investors of
owning and disposing of the SMBS Securities. Consequently, you should consult your own tax
advisors in determining the U.S. federal, state, local, foreign, and any other tax consequences of the
purchase, ownership, and disposition of the SMBS Securities in your particular circumstances.
General
The SMBS Securities and payments on the SMBS Securities generally are subject to taxation.
Therefore, you should consider the tax consequences of holding an SMBS Security before you
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acquire one. The following discussion describes certain U.S. federal income tax consequences to
beneficial owners of the SMBS Securities. The discussion is general and does not purport to deal
with all aspects of U.S. federal income taxation that may be relevant to particular investors. This
discussion may not apply to your particular circumstances for various reasons including the
following:
• This discussion reflects U.S. federal income tax laws in effect as of the date of
this Base Offering Circular. Changes to any of these laws after the date of this
Base Offering Circular may affect the tax consequences discussed below.
• This discussion addresses only SMBS Securities acquired by beneficial owners at
original issuance and held as “capital assets” (generally, property held for
investment).
• This discussion does not address tax consequences to beneficial owners subject to
special rules, such as dealers in securities, certain traders in securities, banks, taxexempt organizations, life insurance companies, persons that hold SMBS
Securities as part of a hedging transaction or as a position in a straddle or
conversion transaction, or persons whose functional currency is not the U.S.
dollar.
• This discussion may be supplemented by a discussion in any applicable
prospectus supplement.
• This discussion does not address taxes imposed by any state, local, or foreign
taxing jurisdiction.
For these reasons, you should consult your own tax advisors regarding the U.S. federal income tax
consequences of holding and disposing of the SMBS Securities in your particular circumstances as
well as any tax consequences arising under the laws of any state, local, or foreign taxing jurisdiction.
Characterization of Trusts and SMBS Securities
The Trust created for each issue of SMBS Securities will be classified as a grantor trust, and not as a
partnership, an association taxable as a corporation, a taxable mortgage pool, or a real estate
mortgage investment conduit, for U.S. federal income tax purposes, unless an alternative
characterization is discussed in the Offering Circular Supplement. Beneficial owners of SMBS
Securities will be treated for U.S. federal income tax purposes as owning an undivided beneficial
interest in the Trust Assets.
A beneficial owner of an SMBS Security will be required to include in income the amounts
described under “— Stripped Bonds and Stripped Coupons” below. In addition, a beneficial owner
of an SMBS Security must include in income an amount equal to the portion of the expenses of the
related Trust allocable to the beneficial owner for tax purposes, including generally the compensation
paid to service the underlying mortgage loans (other than expenses underlying a regular interest in a
real estate mortgage investment conduit that is included in the Trust Assets). For purposes of any
applicable tax information reporting rules, the expenses of a Trust will be allocated among the related
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SMBS Securities in each monthly period in proportion to the present values of the respective
projected amounts of remaining distributions on such SMBS Securities. You should consult your
own tax advisors, however, as to the proper allocation of Trust expenses for U.S. federal income tax
purposes. A beneficial owner of an SMBS Security may deduct its portion of the properly allocable
expenses as provided in section 162 or section 212 of the Code, consistent with its method of
accounting and subject to the discussion under “— Administrative Expenses” below.
Stripped Bonds and Stripped Coupons
Pursuant to section 1286 of the Code, the separation of ownership of the right to receive some or all
of the interest payments on a debt obligation from ownership of the right to receive some or all of the
principal payments results in the creation of “stripped bonds” with respect to principal payments and
“stripped coupons” with respect to interest payments. A beneficial owner of an SMBS Security will
be treated as owning “stripped bonds” to the extent of its share of principal payments and “stripped
coupons” to the extent of its share of interest payments on the Trust Assets, except as discussed
below.
If an SMBS Security entitles the holder to payments of principal and interest on a Trust Asset, the
Service could contend that the SMBS Security should be treated as:
• an interest in the Trust Assets that is not a “stripped bond” or “stripped coupon”
to the extent that the SMBS Security represents an equal pro rata portion of
principal and interest on the Trust Assets, and
• with respect to the remainder, an installment obligation consisting of “stripped
bonds” to the extent of its share of principal payments or “stripped coupons” to
the extent of its share of interest payments.
For purposes of tax information reporting, each SMBS Security will be treated as a single debt
instrument that is taxed under section 1286 of the Code, regardless of the mix of principal and
interest payments. You should consult your own tax advisors as to the proper treatment of an SMBS
Security in this regard.
Under section 1286 of the Code, a beneficial owner of an SMBS Security must treat the SMBS
Security as a debt instrument originally issued on the date the owner acquires it having original issue
discount (“OID”) equal to the excess, if any, of its “stated redemption price at maturity” over the
price considered paid by the owner to acquire it. Subject to the discussion under “— Qualified
Stated Interest” below, the stated redemption price at maturity of an SMBS Security generally will
equal the sum of all distributions to be made on that SMBS Security. For tax information reporting
purposes, all amounts to be distributed on an SMBS Security will be included in the stated
redemption price at maturity of that SMBS Security and, as a result, each SMBS Security will be
treated as if issued with OID.
The beneficial owner of an SMBS Security must include in its ordinary income for U.S. federal
income tax purposes, generally in advance of receipt of the cash attributable to that income, the sum
of the “daily portions” of OID on its SMBS Security for each day during its taxable year on which it
held the SMBS Security. The daily portions of OID are determined as follows:
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• first, the portion of OID that accrued during each “accrual period” is calculated,
• then, the OID accruing during an accrual period is allocated ratably to each day
during the period to determine the daily portion of OID.
The OID Regulations provide that a holder of a debt instrument may use an accrual period of any
length, up to one year, as long as each distribution of principal or interest occurs on either the final
day or the first day of an accrual period. The Tax Administrator will report OID based on accrual
periods of one month. Each of these accrual periods (other than the first accrual period) will begin
on a Distribution Date and end on the day before the next Distribution Date.
Accrual of OID
Although the matter is not entirely clear, a beneficial owner of an SMBS Security should
determine the amount of OID accruing during any accrual period with respect to that SMBS
Security using the method described in section 1272(a)(6) of the Code, except as discussed
below. Under section 1272(a)(6), the portion of OID treated as accruing for any accrual period
equals the excess, if any, of:
• the sum of (A) the present values of all the distributions remaining to be made on
the SMBS Security, if any, as of the end of the accrual period, and
(B) the distributions made on the SMBS Security during the accrual period of amounts
included in the stated redemption price at maturity,
over
• the sum of the present values of all the distributions remaining to be made on the
SMBS Security as of the beginning of the accrual period.
The present values of the remaining distributions should be calculated based on the following:
• an assumption that the mortgage loans backing or comprising the related Trust
Assets prepay at a specified rate (the “Prepayment Assumption”),
• the yield to maturity of the SMBS Security, calculated giving effect to the
Prepayment Assumption,
• events (including actual prepayments) that have occurred prior to the end of the
accrual period, and
• in the case of an underlying mortgage loan calling for a variable rate of interest,
an assumption that the value of the index upon which the variable rate is based
remains constant.
A beneficial owner should determine its yield to maturity based on its purchase price. For a
particular beneficial owner, it is not clear whether the Prepayment Assumption used for calculating
OID should be one determined at the time the SMBS Security is acquired or should be the original
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Prepayment Assumption for the SMBS Security. For tax information reporting purposes, the Tax
Administrator will use the original yield to maturity of the SMBS Security, calculated based on the
original Prepayment Assumption. You should consult your own tax advisors regarding the proper
method for accruing OID on an SMBS Security.
The Code requires that the Prepayment Assumption be determined in the manner prescribed in
Treasury Regulations. To date, no such regulations have been promulgated. For tax information
reporting purposes, the Tax Administrator will assume a Prepayment Assumption for each series of
SMBS Securities. No inference is intended, however, that the mortgage loans backing or comprising
the Trust Assets for a given series will prepay at the rate reflected by the Prepayment Assumption for
that series or at any other rate. You must make your own decision as to the appropriate prepayment
assumption to be used in deciding whether or not to purchase any SMBS Securities.
Qualified Stated Interest
If an SMBS Security entitles the holder to payments of principal and interest, the Service or a holder
could contend that the interest payments on the SMBS Security should be treated as payments of
“qualified stated interest” within the meaning of the OID Regulations. In that case, a beneficial
owner would be required to include such payments in income in accordance with its method of
accounting (and would not accrue OID with respect to such payments as described above).
Further, if the beneficial owner in that case had purchased the SMBS Security for an amount (net of
accrued interest) greater than the outstanding principal amount of the SMBS Security, the beneficial
owner generally would have premium with respect to the SMBS Security in the amount of such
excess. Such a purchaser could elect, under section 171(c) of the Code, to treat the premium as
“amortizable bond premium.” If a beneficial owner makes this election, the beneficial owner must
reduce the amount of any payment of qualified stated interest that must be included in the beneficial
owner’s income for a period by the portion of the premium allocable to the period based on the
SMBS Security’s yield to maturity. Correspondingly, the beneficial owner must reduce its basis in
the SMBS Security by the amount of premium applied to reduce any interest income. An election
will apply to all bonds the interest on which is not excludible from gross income (“fully taxable
bonds”) held by the beneficial owner at the beginning of the first taxable year to which the election
applies and to all fully taxable bonds that it acquires after the beginning of that taxable year. A
beneficial owner may revoke the election only with the consent of the Service. If a beneficial owner
does not elect to amortize premium, (i) the beneficial owner must include the full amount of each
payment of qualified stated interest in income, and (ii) the premium must be allocated to the principal
distributions on the SMBS Security and, when each principal distribution is received, a loss equal to
the premium allocated to that distribution must be recognized. Any tax benefit from the premium not
previously recognized will then be taken into account in computing gain or loss upon the sale or
disposition of the SMBS Security. See “— Sales and other Dispositions of SMBS Securities” below.
You should consult your own tax advisors as to the proper treatment of interest payments on an
SMBS Security as qualified stated interest or OID. As indicated above, the Tax Administrator will
treat all SMBS Securities as being issued with OID (and as not paying qualified stated interest) for
tax information reporting purposes.
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Administrative Expenses
A beneficial owner’s ability to deduct its share of the administrative expenses of the related Trust is
limited under section 67 of the Code in the case of (i) estates and trusts, and (ii) individuals owning
an interest in an SMBS Security directly or through an investment in a “pass-through entity” (other
than in connection with such individual’s trade or business). Pass-through entities include
partnerships, S corporations, grantor trusts, certain limited liability companies, and non-publicly
offered regulated investment companies, but do not include estates, nongrantor trusts, cooperatives,
real estate investment trusts, and publicly offered regulated investment companies.
Generally, such a beneficial owner can deduct its share of these costs only to the extent that the costs,
when aggregated with certain of the beneficial owner’s other miscellaneous itemized deductions,
exceed 2% of the beneficial owner’s adjusted gross income. In addition, such a beneficial owner
may not be able to deduct any portion of these costs in computing its alternative minimum tax
liability. Further, section 68 of the Code may provide for certain limitations on itemized deductions
otherwise allowable for a beneficial owner who is an individual.
Special Tax Characteristics of SMBS Securities
Several sections of the Code provide beneficial treatment to certain taxpayers that invest in mortgage
loans of the type that back or comprise the Trust Assets. With respect to these Code sections, no
specific legal authority exists regarding whether the character of the SMBS Securities will be the
same as that of the mortgage loans that back or comprise the Trust Assets. Although the
characterization of the SMBS Securities for these purposes is not clear, the SMBS Securities should
be considered to represent “real estate assets” within the meaning of section 856(c)(5)(B) of the Code
and “loans secured by an interest in real property” within the meaning of section 7701(a)(19)(C)(v)
of the Code and OID and qualified stated interest with respect to the SMBS Securities should be
considered to represent “interest on obligations secured by mortgages on real property” within the
meaning of section 856(c)(3)(B) of the Code; provided that in each case the underlying mortgage
loans qualify for such treatment.
Combinations of SMBS Securities
If a beneficial owner acquires in one transaction a combination of SMBS Securities, the law is
unclear as to whether the combination should be aggregated or each SMBS Security should be
treated as a separate debt instrument. If a beneficial owner acquires such a combination in separate
transactions, while the matter is not free from doubt, it appears that the U.S. federal income tax
treatment of the SMBS Securities should be determined by treating each such SMBS Security
separately. You should consult your own tax advisors regarding the proper treatment of
combinations of SMBS Securities.
Exchanges of SMBS Securities
If a beneficial owner exchanges one or more SMBS Securities for one or more SMBS Securities of a
different Class with respect to the same Trust in the manner described under “Description of the
Securities – Exchange of Certain Classes of SMBS Securities for other SMBS Securities” above, the
exchange will not be taxable. Likewise, if a beneficial owner exchanges one or more SMBS
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Securities for the related Trust Assets in the manner described under “Description of the Securities –
Exchange of SMBS Securities for Ginnie Mae Certificates” above, the exchange will not be taxable.
Sales and other Dispositions of SMBS Securities
Upon the sale, exchange, or other disposition of an SMBS Security (other than an exchange
described under “— Exchanges of SMBS Securities” above), a beneficial owner generally will
recognize gain or loss equal to the difference between the amount realized and the beneficial owner’s
adjusted basis in the SMBS Security. The adjusted basis of an SMBS Security generally will equal
the cost of the SMBS Security to the beneficial owner, increased by any OID included in the
beneficial owner’s gross income with respect to the SMBS Security, and reduced (but not below
zero) by distributions previously received by the beneficial owner of amounts included in the SMBS
Security’s stated redemption price at maturity and by any premium that has reduced the beneficial
owner’s interest income with respect to the SMBS Security. Any such gain or loss generally will be
capital gain or loss, except as provided in section 582(c) of the Code (which generally applies to
banks). Generally, any capital gain (or loss) will be long-term capital gain (or loss) if at the time of
disposition the beneficial owner held the SMBS Security for more than one year. The ability to
deduct capital losses is subject to limitations.
Information Reporting and Backup Withholding
The Tax Administrator will furnish or make available, within a reasonable time after the end of each
calendar year, to each Holder at any time during that year, all information required by Treasury
Regulations together with such other information as the Tax Administrator deems necessary or
desirable to assist beneficial owners in preparing their U.S. federal income tax returns.
Distributions of interest and principal, as well as distributions of proceeds from the sale of SMBS
Securities, may be subject to “backup withholding tax” under section 3406 of the Code if recipients
of such distributions fail to provide to the payor certain certifications and information, including their
taxpayer identification numbers, or otherwise fail to establish an exemption from that tax. Any such
amounts deducted and withheld from a distribution to a recipient would be allowed as a credit against
the recipient’s U.S. federal income tax. Certain penalties may be imposed by the Service on a
recipient that is required to supply information but does not do so in the proper manner.
The tax information reporting rules for grantor trusts such as the Trusts are being reviewed by the
Service and are subject to change. Any change may affect the manner in which tax items are
reported to Holders as well as the amounts of reported items.
Non-U.S. Persons
Additional rules apply to a beneficial owner of an SMBS Security that is not a U.S. Person (a “NonU.S. Person”). The term “U.S. Person” means:
• a citizen or resident of the United States,
• a corporation that is organized under the laws of the United States, any state
thereof or the District of Columbia, including an entity treated as a corporation
for U.S. federal income tax purposes,
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• a partnership that is organized under the laws of the United States, any state
thereof, or the District of Columbia, including any entity treated as a partnership
for U.S. federal income tax purposes (but not including a partnership that is not
treated as a United States person under applicable Treasury Regulations),
• an estate that is subject to U.S. federal income taxation regardless of the source of
its income, or
• a trust if a court within the United States is able to exercise primary supervision
over the administration of such trust and one or more United States persons have
the authority to control all substantial decisions of the trust (or to the extent
provided in applicable Treasury Regulations, certain trusts in existence on
August 20, 1996, that are eligible to be treated as United States persons).
Payments in respect of an SMBS Security made to a beneficial owner that is a Non-U.S. Person,
including payments of interest and principal and gain from a sale, exchange, or other disposition of
an SMBS Security, generally will be exempt from U.S. federal income and withholding tax, provided
the following conditions are satisfied:
• the beneficial owner does not hold the SMBS Security in connection with its
conduct of a trade or business in the United States,
• in the case of gain from a sale, exchange, or other disposition of an SMBS
Security by an individual beneficial owner, the beneficial owner is not present in
the United States for 183 days or more in the taxable year of the disposition or
certain other conditions are met, and
• the beneficial owner certifies on Form W-8BEN (or a substitute or successor
form), under penalties of perjury, that it is not a United States person and
provides its name and address or otherwise satisfies applicable documentation
requirements.
Backup withholding tax will not apply to payments made to a beneficial owner that is a Non-U.S.
Person if the beneficial owner provides a Form W-8BEN or otherwise establishes an exemption.
STATE TAX CONSIDERATIONS
In addition to the U.S. federal income tax consequences described in “Certain U.S. Federal Income
Tax Consequences,” you should consider the state income tax consequences of the acquisition,
ownership, and disposition of the SMBS Securities. State income tax laws may differ substantially
from the corresponding U.S. federal law, and this discussion does not purport to describe any aspect
of the income tax laws of any state. Therefore, you should consult your own tax advisors with
respect to the various state tax consequences of an investment in the SMBS Securities in your
particular circumstances.
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MARGINABILITY; REPURCHASE AGREEMENTS
The SMBS Securities are “exempted securities” for purposes of the margin rules of the Board of
Governors of the Federal Reserve System and the New York Stock Exchange and transactions in the
SMBS Securities, including repurchase agreements, are treated under those rules in the same manner
as transactions in Ginnie Mae Certificates. However, they do not specify the collateral value of the
SMBS Securities of any Class.
ERISA CONSIDERATIONS
Distributions of principal and interest with respect to the Securities are guaranteed by Ginnie Mae.
The Ginnie Mae Guaranty is supported by the full faith and credit of the United States of America.
A Department of Labor regulation (the “Plan Asset Regulation”) provides that, if an employee
benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), or Section 4975 of the Code (each, a “Plan”) acquires a “guaranteed governmental
mortgage pool certificate,” then, for purposes of the fiduciary responsibility provisions of ERISA and
the prohibited transaction provisions of ERISA and the Code, the Plan’s assets include the certificate
and all rights with respect to the certificate under applicable law, but do not, solely by reason of the
Plan’s holding of that certificate, include any of the mortgages underlying the certificate. For
purposes of the Plan Asset Regulation, a guaranteed governmental mortgage pool certificate is a
certificate backed by, or evidencing an interest in, specified mortgages or participation interests in
mortgages and with respect to which interest and principal payable pursuant to the certificate is
guaranteed by the United States or an agency or instrumentality of the United States. The effect of
the Plan Asset Regulation is that the Sponsor, the Trustee and other Persons providing services with
respect to mortgages in the pool will not be subject to the fiduciary responsibility provisions of Title I
of ERISA or to the prohibited transaction provisions of ERISA and the Code, merely by reason of
the Plan’s investment in a certificate. The Securities will qualify as “guaranteed governmental
mortgage pool certificates” within the meaning of the Plan Asset Regulation.
Plan Investors should be aware that the Plan Asset Regulation does not relieve fiduciaries, other
parties in interest, or disqualified persons from provisions of ERISA and the Code other than those
indicated above, including, for example, the general fiduciary responsibility provisions of section 404
of ERISA and the requirement of section 401(a) of the Code that a qualified plan must operate for the
exclusive benefit of the employees of the employer maintaining the plan and their beneficiaries. Plan
Investors should consult with their advisors to determine whether the purchase, holding, or resale of a
Security could give rise to a transaction that is prohibited or is not otherwise permissible under either
ERISA or the Code. Prospective Plan Investors also should be aware that because the Securities will
not be rated by any rating agency, certain prohibited transaction exemptions that would otherwise be
available will not apply to the purchase or holding of the Securities.
Governmental plans and certain church plans, while not subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of ERISA and the Code, may
nevertheless be subject to local, state or other federal laws that are substantially similar to the
foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their
counsel before purchasing any of the Securities.
VI-5-27
LEGAL INVESTMENT CONSIDERATIONS
Institutions whose investment activities are subject to legal investment laws and regulations or to
review by certain regulatory authorities may be subject to restrictions on investment in certain types
of Securities. Any financial institution that is subject to the jurisdiction of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of Thrift Supervision, the National Credit Union Administration or other
federal or state agencies with similar authority should review any applicable rules, guidelines and
regulations prior to purchasing any Securities. In addition, financial institutions should consult their
regulators concerning the risk-based capital treatment of any Securities. Investors should consult
their own legal advisors in determining whether and to what extent Securities constitute legal
investments or are subject to restrictions on investment.
SECONDARY MARKET
There can be no assurance that a secondary market for the Securities in any Series will develop or, if
a secondary market does develop, that it will provide the Holders of the Securities with liquidity of
investment or that it will continue for the life of the Securities. Furthermore, because interests in
each Trust are offered in multiple Classes, the liquidity of any Class may be less than it would be if
only one Class of Securities were offered. Each Sponsor and Co-Manager, if applicable, intends to
establish a market in the Securities. No Sponsor or Co-Manager, if applicable, however, will be
obligated to establish any market in the Securities or to maintain one if so established. For some
Classes of Securities, no secondary trading market exists or is likely to develop. For that reason,
investors must be able to bear the risks of their investment in such Securities for an indefinite period
of time. See “Legal Investment Considerations” for a description of other factors that may limit the
liquidity of certain of the Securities.
VI-5-28
APPENDIX I
CLASS TYPES
The following list contains standard abbreviations used to describe certain class types. Definitions of
the class types may be found in Appendix II. The definitions are not intended as descriptions of the
material risks associated with any Class. For a discussion of the risks associated with particular class
types, investors should see “Risk Factors” in this Base Offering Circular.
Standard
Category of
Abbreviation
Class Definition
PRINCIPAL TYPES
NTL
Notional Class
PT
Pass-Through Class
INTEREST TYPES
IO
Interest Only Class
PO
Principal Only Class
VI-5-29
APPENDIX II
GLOSSARY
The following list contains an abbreviated definition of certain capitalized terms used in this Base
Offering Circular, in Offering Circular Supplements and in SMBS Trust Agreements for any Series.
These definitions will apply unless otherwise specified in the text of the Base Offering Circular or an
Offering Circular Supplement. The SMBS Trust Agreement may contain a more complete definition
of certain of the terms defined herein, and reference should be made to the applicable SMBS Trust
Agreement for more complete definitions of all the terms.
Accountants.................................................. With respect to each Series, an accounting firm,
designated in the related Sponsor Agreement, that is
responsible for performing certain agreed-upon
procedures relating to certain numerical information
(a) in the Offering Circular and (b) on the Final
Data Statement and Supplemental Statement, if any.
Accounting Date .......................................... For any Class, with respect to each Distribution
Date, the last day of the related Accrual Period.
Accredited Investor...................................... An “accredited investor” as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D of the
Securities Act of 1933.
Accrual Period ............................................. Unless otherwise provided in the applicable SMBS
Trust Agreement, the Accrual Period relating to any
Distribution Date will be the calendar month
preceding the month of the Distribution Date.
VI-5-30
Affiliate ........................................................ With respect to any specified Person, any other
Person controlling or controlled by or under
common control with such specified Person. For
the purposes of this definition, “control” when used
with respect to any specified Person means the
power to direct the management and policies of
such Person, directly or indirectly, whether through
the ownership of voting securities (including,
without limitation, partnership interests or interests
of members of a limited liability company), by
contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the
foregoing.
Base Offering Circular................................. The offering document containing basic information
about the Securities in general, to which, for each
Series an Offering Circular Supplement relates.
Beneficial Owner ......................................... The beneficial owner of any Security.
Book-Entry Depository................................ The Federal Reserve Bank of New York or any
other depository selected by Ginnie Mae to act in
the equivalent capacity as the Federal Reserve Bank
of New York.
Business Day................................................ A day other than (a) a Saturday or Sunday, (b) a day
on which the banking institutions in the State of
New York are authorized or obligated by law or
executive order to remain closed or (c) a federal
legal public holiday as defined in 5 U.S.C. section
6103.
VI-5-31
Calculated Certificate Factor ....................... With respect to any Trust MBS (other than Trust
MBS that consist of Ginnie Mae Platinum
Certificates) for which a Certificate Factor is not
available on the Certificate Factor Date, a factor
calculated by the Trustee for such date by assuming
receipt of all scheduled principal and interest on
such Trust MBS and taking into account actual
receipts through the applicable Ginnie Mae
Certificate Payment Date during the month
preceding the month of calculation. For purposes of
that calculation, the Trustee shall assume that such
Trust MBS represents a single mortgage loan that
amortizes on a level installment basis and has the
following characteristics: (a) a principal balance
equal to the outstanding principal balance of the
Trust MBS, (b) a remaining term to maturity equal
to the period from the date of calculation to the
Maturity Date of such Trust MBS and (c) an interest
rate equal to the Certificate Rate of such Trust MBS
plus 0.50% (in the case of a Ginnie Mae I
Certificate), 1.50% (in the case of a Ginnie Mae II
Certificate issued prior to July 1, 2003 or 0.75% (in
the case of a Ginnie Mae II Certificate issued on or
after July 1, 2003)).
Certificate Factor ......................................... With respect to each Trust MBS and each
Certificate Factor Date, the factor for such date.
Certificate Factor Date................................. With respect to each Distribution Date and any
Ginnie Mae I Certificate and Ginnie Mae II
Certificate, the seventh Business Day of the month
in which such Distribution Date occurs.
VI-5-32
Certificate Guaranty Agreement .................. With respect to each Ginnie Mae MBS Certificate,
an agreement under which, among other things, (a)
the related Ginnie Mae Issuer has agreed to advance
its own funds in order to make timely payments on
the Ginnie Mae MBS Certificate, even if the
amounts received on the underlying Mortgage
Loans are less than required to make these
payments, and (b) Ginnie Mae has agreed to
guarantee payments on the Ginnie Mae MBS
Certificates.
Certificate Rate ............................................ For any Distribution Date and as to any Trust MBS,
the per annum interest rate payable on the Trust
MBS on the applicable Ginnie Mae Certificate
Payment Date. For any Distribution Date and as to
any Underlying Certificate, the per annum interest
rate payable on such Underlying Certificate on the
applicable Underlying Certificate Payment Date.
For any Distribution Date and as to any Underlying
SMBS Security, the per annum interest rate payable
on such Underlying SMBS Security on the
applicable Underlying SMBS Security Payment
Date.
Class............................................................. As to any Trust, all SMBS Securities sharing the
same designation. The SMBS Trust Agreement
shall specify, the designations, Original Class
Principal Balances (if any), original Class Notional
Balances (if any), Interest Rates (if any) and other
specific characteristics of each Class of Securities.
As to any REMIC Trust, all REMIC Securities
sharing the same designation. As to any MX Trust,
all Modifiable and MX Securities sharing the same
designation.
Class Notional Balance ................................ The balance used as a reference to calculate the
amount of interest due on a Notional Class.
VI-5-33
Class Principal Balance................................ As to any Class other than a Notional Class as of
any Distribution Date, the Original Class Principal
Balance of that Class less all payments of principal
previously allocated to that Class on previous
Distribution Dates, except as otherwise provided in
the related Offering Circular and SMBS Trust
Agreement.
Class Type.................................................... An Interest Type or Principal Type.
Closing Date................................................. For each Series, the date upon which the Sponsor,
pursuant to the SMBS Trust Agreement deposits the
Trust Assets in the Trust in exchange for the
Securities and settles for the Securities.
Closing Documents...................................... With respect to each Series, those documents,
specified in the related Sponsor Agreement, that are
to be executed by the parties to the transaction on or
before the Closing Date.
Code ............................................................. The Internal Revenue Code of 1986, as amended.
Corporate Trust Office................................. With respect to a Series, the meaning specified in
the related SMBS Trust Agreement.
Co-Manager ................................................. With respect to a Series, the Person(s), identified in
the Offering Circular Supplement, with whom the
Sponsor has entered into an agreement pursuant to
which the Co-Manager may contribute certain of the
underlying Trust Assets and the Co-Manager, may
acquire in exchange, the right to distribute certain of
the Securities.
VI-5-34
CUSIP Number ............................................ A unique nine-character designation assigned by the
CUSIP Service Bureau to each Class.
Depository.................................................... The Book-Entry Depository or Trust Asset
Depository, as the context requires.
Distribution Amount .................................... With respect to each Series and each Distribution
Date, the sum of the Principal Distribution Amount
and the Interest Distribution Amount for the Series.
Distribution Date.......................................... The date specified in the SMBS Trust Agreement
relating to each Series upon which distributions are
required to be made to Holders of Securities of such
Series.
e-Access ....................................................... Ginnie Mae’s Multiclass Securities e-Access, a
database of information relating to the Ginnie Mae
Securities located on Ginnie Mae’s website at
http://www.ginniemae.gov.
ERISA .......................................................... The Employee Retirement Income Security Act of
1974, as amended.
Fedwire Book-Entry System........................ The book-entry system for securities operated and
maintained by the U.S. Federal Reserve Banks.
FHA.............................................................. The Federal Housing Administration.
FHA Loans................................................... Residential mortgage loans insured by FHA.
VI-5-35
Final Data Statement.................................... With respect to each Series, the final list of Trust
Assets to be included in the related Trust. This
Final Data Statement will be prepared on the basis
of a document in computer-readable format
furnished to the related Accountants, Financial
Advisors and Trustee by the Sponsor, and a copy of
it will be attached to the related SMBS Trust
Agreement as of the Closing Date.
Final Distribution Date ................................ As to each Class, the Distribution Date, set forth in
the related SMBS Trust Agreement on or before
which the final payment due on that Class will be
made.
Final Structure Date ..................................... The date by which the Sponsor must submit a final
Securities Structure to Ginnie Mae.
Financial Advisor......................................... The entity, chosen by Ginnie Mae, that serves as
financial advisor to Ginnie Mae in connection with
the Ginnie Mae Multiclass Securities Program. The
name and address of the current Financial Advisor
is contained in the Ginnie Mae Multiclass Securities
Guide in the document entitled “Ginnie Mae
REMIC Transaction Participants.”
Fixed Rate Class .......................................... A Class with an Interest Rate that is fixed
throughout the life of the Class.
Ginnie Mae................................................... The Government National Mortgage Association.
Ginnie Mae Certificate................................. A Ginnie Mae I Certificate or Ginnie Mae II
Certificate.
VI-5-36
Ginnie Mae Certificate Payment Date ......... For any Trust MBS, the day of each month on
which payment is required to be made to the holder
of that Trust MBS.
Ginnie Mae Guaranty................................... The guaranty of Ginnie Mae with respect to the
timely payment of all principal and interest on each
Security in accordance with the terms of that
Security as set forth in the related SMBS Trust
Agreement.
Ginnie Mae Guaranty Fee............................ The fee payable to Ginnie Mae in exchange for its
guaranty of the Securities of a Series. The fee
consists of a percentage of the aggregate Original
Class Principal Balance of the related Securities,
payable to Ginnie Mae on the Closing Date.
Ginnie Mae Guaranty Fee Percentage ......... With respect to a Series, the percentage used to
calculate the Ginnie Mae Guaranty Fee, as specified
in the related SMBS Trust Agreement.
Ginnie Mae Guaranty Payment.................... Any payment made by Ginnie Mae pursuant to the
Ginnie Mae Guaranty.
Ginnie Mae I Certificate .............................. A Ginnie Mae I MBS Certificate or a Ginnie Mae
Platinum Certificate backed by Ginnie Mae I MBS
Certificates.
Ginnie Mae I MBS Certificate..................... A certificate, directly or indirectly, backed by a pool
of single-family Mortgage Loans, guaranteed by
Ginnie Mae pursuant to a Certificate Guaranty
Agreement and issued pursuant to the Ginnie Mae I
Program.
VI-5-37
Ginnie Mae I Program ................................. The program governed by the provisions contained
in Ginnie Mae Handbook 5500.3 or its successor.
Ginnie Mae II Certificate ............................. A Ginnie Mae II MBS Certificate or a Ginnie Mae
Platinum Certificate backed by Ginnie Mae II MBS
Certificates.
Ginnie Mae II MBS Certificate.................... A certificate, directly or indirectly, backed by a pool
of single-family Mortgage Loans, guaranteed by
Ginnie Mae pursuant to a Certificate Guaranty
Agreement and issued pursuant to the Ginnie Mae II
Program.
Ginnie Mae II Program ................................ The program governed by the provisions contained
in Ginnie Mae Handbook 5500.3 or its successor.
Ginnie Mae Issuer ........................................ A Person who has issued a Ginnie Mae MBS
Certificate or a Ginnie Mae Platinum Certificate or
such Person’s successors and assigns.
Ginnie Mae MBS Certificate ....................... Any Ginnie Mae I MBS Certificate or Ginnie Mae
II MBS Certificate.
Ginnie Mae Multiclass Securities Guide ..... The Ginnie Mae Multiclass Securities Guide, as
amended from time to time, which includes the
Ginnie Mae REMIC Guide in Parts I and II, the
Ginnie Mae Platinum Guide in Part III, the Ginnie
Mae Multifamily Guide in Part IV, and the Callable
Securities Addendum.
VI-5-38
Ginnie Mae Multiclass Securities
The program established by Ginnie Mae pursuant to
Program........................................................ Section 306(g) of the National Housing Act, as
amended, for the issuance of Securities.
Ginnie Mae Platinum Certificate ................. One of the certificates issued by the Ginnie Mae
Platinum Trust guaranteed by Ginnie Mae pursuant
to a Ginnie Mae Platinum Guaranty Agreement and
transferred to a depositor of the Ginnie Mae
Platinum Trust in exchange for the Ginnie Mae
MBS Certificates transferred to the Ginnie Mae
Platinum Trust by the depositor.
Ginnie Mae Platinum Guaranty
With respect to a series of Ginnie Mae Platinum
Agreement.................................................... Certificates, the agreement pursuant to which
Ginnie Mae guarantees the timely payment of
principal and interest on the Ginnie Mae Platinum
Certificates in accordance with their terms.
Ginnie Mae Platinum Guide ........................ Part III of the Ginnie Mae Multiclass Securities
Guide.
Ginnie Mae Platinum Trust.......................... The trust, formed pursuant to a trust agreement, that
issues Ginnie Mae Platinum Certificates.
Ginnie Mae REMIC Guide .......................... Parts I and II of the Ginnie Mae Multiclass
Securities Guide.
Ginnie Mae Security .................................... Any Ginnie Mae SMBS Security.
Ginnie Mae SMBS Security......................... A Ginnie Mae Guaranteed Stripped MortgageBacked Security.
VI-5-39
Ginnie Mae SMBS Trust ............................. A trust created pursuant to a SMBS Trust
Agreement for the purpose of issuing Ginnie Mae
Stripped Mortgage-Backed Securities.
Government Loans....................................... Collectively, FHA Loans, VA Loans, RD Loans and
HUD Loans.
Guaranty Agreement.................................... With respect to each Series, the agreement pursuant
to which Ginnie Mae guarantees the timely payment
of principal and interest on the Securities in
accordance with their terms.
Guide............................................................ The Ginnie Mae Multiclass Securities Guide.
Holder .......................................................... Any person whose name appears on the books and
records of the Registrar as the record holder of a
Security.
HUD............................................................. The United States Department of Housing and
Urban Development.
HUD Loans .................................................. Residential mortgage loans guaranteed by HUD
pursuant to Section 184 of the Housing and
Community Development Act of 1992.
VI-5-40
Information Agent........................................ The Bank of New York or another Person
designated by Ginnie Mae, that will, among other
things, (a) provide information about the factors on
the Trust Assets to the Trustee of the Trust that
owns those Trust Assets, (b) make certain
information about the Securities available to the
public (by posting it on e-Access) and forward that
information to Ginnie Mae and the Holders as
provided in the SMBS Standard Trust Provisions
and (c) keep and furnish to investors, upon request,
copies of any Underlying Certificate Disclosure
Documents relating to any Underlying Certificates
and the Underlying SMBS Security Disclosure
Documents relating to any Underling SMBS
Securities.
Interest Distribution Amount ....................... With respect to each Series and each Distribution
Date, the aggregate interest accrued at the Interest
Rate of each related Class for the applicable Accrual
Period.
Interest Only Class....................................... A Class that (a) does not have a Class Principal
Balance (other than a Class Notional Balance) and
is entitled to payments of interest only or (b) has
only a nominal Class Principal Balance and a
disproportionately high Interest Rate.
Interest Only Security .................................. A Security of an Interest Only Class.
Interest Rate ................................................. As of any date of determination and with respect to
each interest-bearing Class, the annual interest rate
on that Class determined in accordance with the
related SMBS Trust Agreement.
VI-5-41
Interest Type ................................................ With respect to a Security, the category of its
interest payment allocation, as identified in
Appendix I of the Base Offering Circular.
Issue Date..................................................... The date of issuance of a Trust MBS or an
Underlying Certificate or an Underlying SMBS
Security.
Legal Advisor............................................... With respect to each Series, a law firm designated
by Ginnie Mae to act as legal advisor to Ginnie
Mae. The names and addresses of the current Legal
Advisors are contained in the Ginnie Mae REMIC
Guide in the document entitled “Ginnie Mae
REMIC Transaction Participants.”
Maturity Date ............................................... With respect to a Trust MBS, the final Ginnie Mae
Certificate Payment Date for such Trust MBS.
With respect to an Underlying Certificate, the final
Underlying Certificate Payment Date for such
Underlying Certificate. With respect to an
Underlying SMBS Security, the final Underlying
SMBS Security Payment Date for such Underlying
SMBS Security.
Modifiable Class .......................................... Each Class issued in respect of an MX Trust that
may be exchanged for proportionate interests in a
related MX Class or Classes but is not itself
identified as an MX Class in the Available
Combinations Schedule. Each Modifiable Class
relates to a Class of REMIC Securities with the
same designation (for example, a Modifiable Class
designated Class A corresponds to the Class of
REMIC Securities designated Class A).
VI-5-42
Modifiable Securities ................................... Any Ginnie Mae Guaranteed Grantor Trust PassThrough Security relating to a Modifiable Class that
is issued pursuant to the Ginnie Mae Multiclass
Securities Program.
Monthly Information.................................... With respect to each Series, the information, such as
the Series Factors and Interest Rates, posted on eAccess on a monthly basis.
Mortgage ...................................................... A first-lien, one- to four-family residential
mortgage, either insured or guaranteed by FHA, RD
or VA, that underlies a Ginnie Mae Certificate.
Mortgage Loan............................................. With respect to each Trust Asset, each of the
mortgage loans in the pool or pools underlying such
Trust Asset.
Mortgage Note ............................................. The instrument evidencing the debt underlying the
related Mortgage.
Mortgage Rate.............................................. With respect to any Mortgage Loan, the per annum
interest rate on the related Mortgage Note.
Mortgaged Property ..................................... The one- to four-family residential property,
including a condominium, located in any one of the
50 states, the District of Columbia or any U.S.
territory, commonwealth or possession, securing or
the subject of a Mortgage Loan.
Mortgagor .................................................... The obligor on a Mortgage Note.
VI-5-43
MX Class ..................................................... Each Class issued in respect of an MX Trust that
may be exchanged for proportionate interests in
related Classes of Modifiable Securities.
MX Security................................................. Any Ginnie Mae Guaranteed Grantor Trust PassThrough Security issued pursuant to the Ginnie Mae
Multiclass Securities Program in respect of an MX
Class.
MX Trust...................................................... A Ginnie Mae MX Trust.
Notional Class.............................................. A Class that does not have a Class Principal
Balance (but rather has a Class Notional Balance)
and is entitled to payments of interest only.
Offering Circular.......................................... In connection with each offering of Ginnie Mae
SMBS Securities, the Base Offering Circular
therefor and the related Offering Circular
Supplement. In connection with each offering of
Ginnie Mae REMIC Securities, the Base Offering
Circular therefor and the related Offering Circular
Supplement. In connection with each offering of
Ginnie Mae Stripped Mortgage-Backed Securities,
the offering circular therefor.
Offering Circular Supplement...................... The supplement to the Base Offering Circular
constituting a part of the Offering Circular and all
supplements, if any, to the Offering Circular
Supplement, including any Supplemental Statement.
Opinion of Counsel ...................................... A written opinion of counsel, given by counsel
reasonably acceptable to the addressee and Ginnie
Mae, upon which Ginnie Mae is authorized to rely.
VI-5-44
Original Class Principal Balance ................. As to each Class, the original principal amount of
that Class of Securities, as set forth in the related
Offering Circular Supplement and SMBS Trust
Agreement.
Participating Affiliate................................... As specified in the Sponsor Agreement, an Affiliate
of the Sponsor, which Affiliate is participating in
the related transaction.
Pass-Through Class...................................... A Class that either individually or together with
other Classes receive on each Distribution Date all
or substantially all of the principal payments
received on the related Trust Assets.
Paying Agent................................................ The Book-Entry Depository or another Person
appointed with Ginnie Mae’s consent to act,
pursuant to the SMBS Trust Agreement as paying
agent.
Percentage Interest ....................................... As to any Security for purposes of allocating
distributions, the percentage interest evidenced
thereby in distributions required to be made on the
related Class, that percentage interest being (a) set
forth on the face of that Security or (b) equal to the
percentage obtained by dividing the denomination
of that Security by the aggregate of the
denominations of all Securities of the related Class.
Person........................................................... Any individual, corporation, partnership, limited
liability company, joint venture, trust (including any
beneficiary thereof), unincorporated organization or
government or agency or political division thereof.
VI-5-45
Plan .............................................................. An employee benefit plan subject to ERISA or
Code section 4975.
Plan Asset Regulations ................................ The Department of Labor regulations set forth in 29
C.F.R. § 2510.3-101, as amended from time to time.
Plan Investor ................................................ Any of the following: (a) a “benefit plan investor”
that is described in or subject to the Plan Asset
Regulations; (b) a plan or arrangement that is
subject to Code section 4975; (c) a “governmental
plan” as defined in section 3(32) of ERISA; (d) any
plan or arrangement that is subject to any federal,
state, or local law that is substantially similar to the
Plan Asset Regulations, Code section 4975, or
ERISA section 3(32); (e) any person acting on
behalf of or utilizing the assets of any of the
foregoing; and (f) any insurance company that is
considered to be a Plan Investor pursuant to the
following sentence. An insurance company is a
Plan Investor unless all funds used by the insurance
company in acquiring a Security were held by the
insurance company in its general account, the
insurance company will hold the Security in its
general account, and the insurance company
reasonably believes that its general account and the
Security do not and will not constitute “plan assets”
for purposes of ERISA and the Plan Asset
Regulations.
Principal Distribution Amount..................... With respect to each Series and each Distribution
Date, the sum of (I) with respect to each Trust
MBS, the amount by which (a) the product of (i) the
original principal amount of that Trust MBS and (ii)
the Certificate Factor or Calculated Certificate
Factor, as applicable, for the preceding Distribution
Date exceeds (b) the product of (i) the original
principal amount of the Trust MBS and (ii) the
Certificate Factor or Calculated Certificate Factor,
as applicable, for the current Distribution Date; and
(II) with respect to each Underlying Certificate (or
Underlying SMBS Security), the amount by which
VI-5-46
(a) the product of (i) the original principal amount
of that Underlying Certificate (or Underlying SMBS
Security) and (ii) the Underlying Certificate Factor
for the preceding Distribution Date exceeds (b) the
product of (i) the original principal amount of the
Underlying Certificate (or Underlying SMBS
Security) and (ii) the Underlying Certificate Factor
for the current Distribution Date; provided however,
that the amount calculated pursuant to clause (II) is
subject to adjustment pursuant to the applicable
SMBS Trust Agreement in the event that
Underlying Certificate Factors are unavailable in
respect of any Distribution Date. (For the first
Distribution Date, the product in clause (I) (a) or (II)
(a) above shall be the principal amount of the Trust
Asset as of the Closing Date.) The sum of the
amounts so calculated for each Trust Asset
conveyed to a Trust for a Series is the Principal
Distribution Amount for that Series.
Principal Only Class .................................... A Class with a fixed Interest Rate of zero.
Principal Only Security................................ A Security of a Principal Only Class.
Principal Type.............................................. With respect to a Security, the category of its
principal allocation, as identified in Appendix I of
the Base Offering Circular.
Record Date ................................................. For each Security, with respect to each Distribution
Date, unless otherwise specified in the related
SMBS Trust Agreement the last Business Day of
the month immediately preceding the month in
which that Distribution Date occurs.
VI-5-47
Register ........................................................ The register maintained by the Registrar for the
Holders with respect to each Trust.
Registrar....................................................... With respect to each Series the Trustee or any
successor registrar appointed pursuant to the related
SMBS Trust Agreement.
REMIC Trust ............................................... A Ginnie Mae REMIC Trust.
RD ................................................................ Rural Development.
RD Loans ..................................................... Residential mortgage loans insured by RD.
Securities Structure ...................................... The structure of a particular Series, including, as
applicable, the designation, Original Class Principal
Balance or original Class Notional Balance, Interest
Rate and Class Type of each Class in that Series, the
priority of distributions among the Classes in that
Series and any call rights related to a Class in that
Series.
Security or SMBS Security.......................... A Ginnie Mae Guaranteed Stripped MortgageBacked Security.
Series............................................................ A series of Securities issued pursuant to the terms of
a SMBS Trust Agreement and having the numerical
or other designation specified in the related SMBS
Trust Agreement.
VI-5-48
Series Factor................................................. With respect to each Series, a number truncated to
eight decimal places calculated by the Trustee and
published or otherwise made available to investors
on or about one Business Day preceding each
Distribution Date that, when multiplied by the
Original Class Principal Balance (or original Class
Notional Balance) of any Class, determines the
Class Principal Balance (or Class Notional
Balance), after giving effect to any distribution of
principal to be made on the Securities on that
Distribution Date.
SMBS Standard Sponsor Provisions............ With respect to each Series, the SMBS Standard
Sponsor Provisions in effect as of the date of the
related Sponsor Agreement.
SMBS Trust Agreement............................... An agreement between the Sponsor and the Trustee
that identifies and establishes the Trust as a “grantor
trust” for U.S. federal income tax purposes. Each
SMBS Trust Agreement incorporates the related
SMBS Standard Trust Provisions by reference and
may modify, amend or supplement the conditions of
such SMBS Standard Trust Provisions in any
respect.
Sponsor ........................................................ With respect to any Trust, the Person, identified in
the related SMBS Trust Agreement who establishes
the Trust by (a) executing such SMBS Trust
Agreement, and (b) depositing the appropriate Trust
Assets in the Trust in exchange for the Securities.
VI-5-49
Sponsor Agreement...................................... An agreement, which incorporates by reference the
related SMBS Standard Sponsor Provisions,
pursuant to which, among other things, the Sponsor
agrees, subject to certain conditions, to convey the
Trust Assets to the Trust and to purchase the
Securities from the Trust, and Ginnie Mae agrees,
subject to certain conditions, to guarantee the
Securities.
Standard Trust Provisions ............................ The SMBS Standard Trust Provisions.
Supplemental Statement............................... A statement posted on e-Access showing any
characteristics of the Securities of a Series that
differ materially from those shown in the related
Offering Circular.
Tax Administrator........................................ With respect to a Trust, the Person designated in the
related SMBS Trust Agreement to perform certain
tax administrative functions for such trust.
Terms Sheet ................................................. With respect to each Series, the portion of the
related Offering Circular Supplement summarizing
the basic terms of the transaction.
Treasury ....................................................... The United States Treasury Department.
Treasury Regulations ................................... The regulations, including proposed regulations and
temporary regulations, promulgated under the Code
from time to time.
Trust ............................................................. A Ginnie Mae SMBS Trust.
VI-5-50
Trust Asset ................................................... As to any Trust, any Trust MBS, Underlying
Certificate or Underlying SMBS Security conveyed
thereto by the related Sponsor.
Trust Asset Depository ................................ Any depository institution acceptable to Ginnie Mae
at which a Trust Asset Depository Account is
established.
Trust Asset Depository Account.................. With respect to each Trust, to the extent required by
the applicable SMBS Trust Agreement, a limited
purpose account maintained by the Trustee at one or
more Trust Asset Depositories, which account shall
be credited with all distributions in respect of Trust
Assets (other than Trust Assets maintained through
the book-entry system of the Federal Reserve Bank
of New York) held in the related Trust Asset
Depository.
Trust Asset Payment Date............................ A Ginnie Mae Certificate Payment Date,
Underlying Certificate Payment Date or Underlying
SMBS Security Payment Date, as the context
requires.
Trust Counsel ............................................... With respect to each Series, the law firm, designated
in the Sponsor Agreement as counsel to the related
Trust responsible for preparing the Offering
Circular and Closing Documents, for coordinating
preclosing and closing and for providing certain
Opinions of Counsel.
Trust Fund.................................................... The corpus of the Trust established the SMBS Trust
Agreement as further described in the respective
agreements.
VI-5-51
Trust MBS.................................................... As to any Trust any Ginnie Mae Certificates
conveyed thereto by the related Sponsor.
Trustee.......................................................... The person identified in a SMBS Trust Agreement
as trustee for the related trust.
Trustee Fee................................................... For each Series, with respect to each Distribution
Date, the fee payable to the Trustee, as provided in
the related SMBS Trust Agreement.
Underlying Certificate ................................. As to any Trust or SMBS Trust, any previously
issued certificates, which directly or indirectly
represent “regular interests” in a REMIC and
evidence a direct or indirect beneficial ownership
interest in a separate pool of Ginnie Mae
Certificates.
Underlying Certificate Disclosure
The prospectus, offering circular or other disclosure
Documents ................................................... document pursuant to which an Underlying
Certificate was offered.
Underlying Certificate Payment Date.......... With respect to an Underlying Certificate, the day
of each month on which distributions are required to
be made to the holder of such Underlying
Certificate.
Underlying Certificate Factor ...................... With respect to each Underlying Certificate or
Underlying SMBS Security, the factor provided by
the related issuer, information agent or trustee for
such Underlying Certificate or Underlying SMBS
Security, as applicable.
VI-5-52
Underlying Series......................................... As to each Underlying Certificate or Underlying
SMBS Security, the related series of Underlying
Certificates or Underlying SMBS Securities.
Underlying SMBS Security ......................... As to any Trust, any previously issued SMBS
Security that is included in a Trust.
Underlying SMBS Security Payment Date.. With respect to an Underlying SMBS Security, the
day of each month on which distributions are
required to be made to the Holder of such
Underlying SMBS Security.
Underlying Trust.......................................... As to any Underlying Series, the related segregated
Trust, REMIC Trust or MX Trust.
VA................................................................ The United States Department of Veterans Affairs.
VA Loans ..................................................... Residential mortgage loans made to veteran
borrowers under one of VA’s loan guaranty
programs.
Voting Rights ............................................... The voting rights of the Securities.
Weighted Average Coupon.......................... With respect to a Series and for any Distribution
Date, the weighted average of the Mortgage Rates
of the Mortgage Loans underlying the Trust MBS,
weighted on the basis of the respective current
principal balances of those Mortgage Loans
immediately following the applicable Ginnie Mae
Certificate Payment Date in the month preceding
the month of that Distribution Date.
VI-5-53
Weighted Average Loan Age....................... With respect to a Series and for any Distribution
Date, the weighted average loan age (in months) of
the Mortgage Loans underlying the Trust MBS,
weighted on the basis of the respective current
principal balances of those Mortgage Loans
immediately following the applicable Ginnie Mae
Certificate Payment Date in the month preceding
the month of that Distribution Date.
Weighted Average Remaining Term to
With respect to a Series and for any Distribution
Maturity........................................................ Date, the average of the remaining terms to maturity
of the Mortgage Loans underlying the Trust MBS,
weighted on the basis of the respective current
principal balances of those Mortgage Loans
immediately following the applicable Ginnie Mae
Certificate Payment Date in the month preceding
the month of that Distribution Date.
VI-5-54
THIS PAGE INTENTIONALLY LEFT BLANK
VI-5-55
FORM OF OFFERING CIRCULAR SUPPLEMENT
FOR SMBS TRANSACTIONS
VI-6-0
Offering Circular Supplement
(To SMBS Base Offering Circular dated [ ], 20[ ])
$[
]
Government National Mortgage Association
GINNIE MAE®
Guaranteed Stripped Mortgage-Backed Securities
Ginnie Mae SMBS Trust [ ]
The Securities
The Trust will issue the classes of Securities listed in the table below, and certain additional classes of securities
as further described herein, which may be exchanged for other securities or for the Underlying Ginnie Mae [Platinum]
Certificate[s] or a portion thereof.
You can exchange them for the [Ginnie Mae Platinum Certificate] [Ginnie Mae Certificates] [Underlying Certificates]
[previously issued Ginnie Mae Guaranteed Stripped Mortgage Backed Securities] (or a portion thereof) or other
Securities, and vice versa as described below.
(1)
(2)
Class
Original
Principal
Balance(1)
1
2
$[ ]
$[ ]
Interest
Rate
[ ]%
[ ]%
Principal
Type(2)
Interest
Type(2)
PT
NTL
PO
IO
Subject to increase as described under “Increase in Size” in this Supplement. The amount
shown for the Notional Class (indicated by “NTL” under Principal Type) is its original Class
Notional Balance and does not represent principal that will be paid.
As defined under “Class Types” in Appendix I to the SMBS Base Offering Circular.
The yields on some Classes of Securities will be extremely sensitive to prepayment experience on the
underlying mortgage loans. You should carefully consider the associated risks, including, for the [Class 2] Securities, the
risk that you might not recover your initial investment. See “Yield, Maturity and Prepayment Considerations” on page [
] hereof. See also “Risk Factors” on page [ ] of the SMBS Base Offering Circular, which highlights some investment
risks.
The Ginnie Mae Guaranty
Ginnie Mae will guarantee the timely payment of principal and interest on the securities. The Ginnie Mae
Guaranty is backed by the full faith and credit of the United States of America.
The Trust and its Assets
The Trust will own [Ginnie Mae MBS Certificates,] [[a] Ginnie Mae Platinum Certificate[s] backed by Ginnie
Mae MBS Certificates,] [REMIC or comparable mortgage certificates,] [previously issued Ginnie Mae Guaranteed
Stripped Mortgage-Backed Securities].
_______________________
The Sponsor and the Co-Sponsor will offer the securities from time to time in negotiated transactions at
varying prices.
We expect the Closing Date to be _____, 20__. You should read the SMBS Base Offering Circular as well as
this Supplement.
The securities are exempt from registration under the Securities Act of 1933 and are “exempted securities”
under the Securities Exchange Act of 1934.
VI-6-1
[SPONSOR]
[CO-SPONSOR]
The date of this Offering Circular Supplement is [ ], 20[ ]
VI-6-2
Ginnie Mae SMBS Trust [
]
Exchanges
As contemplated in the SMBS Base Offering Circular, Securities of one or more Classes will be
exchangeable on the book-entry system of the Federal Reserve Banks for (i) a Ginnie Mae Platinum
Certificate (representing all or a portion of the Ginnie Mae Platinum Certificate originally included in
the Trust) and/or (ii) Securities of one or more other Classes. The conditions for any such exchange
are as follows:
For the [Ginnie Mae Platinum Certificates] [Ginnie Mae Certificates] [Underlying Certificates]
[previously issued Ginnie Mae Guaranteed Stripped Mortgage Backed Securities]: The Securities
surrendered for exchange must, in the aggregate, provide for monthly distributions of interest in an
amount equivalent to interest at a rate of [5.5%] per annum on the aggregate Class Principal Balances
(exclusive of the Class Notional Balances of any [Class 2] Securities) of such Securities so
exchanged. In addition, the total outstanding principal balance of the [Ginnie Mae Platinum
Certificate] [Ginnie Mae Certificates] [Underlying Certificates] [previously issued Ginnie Mae
Guaranteed Stripped Mortgage Backed Securities] of authorized denomination to be delivered will
equal the aggregate Class Principal Balances of the Securities surrendered for exchange. The [Ginnie
Mae Platinum Certificates] [Ginnie Mae Certificates] [Underlying Certificates] [previously issued
Ginnie Mae Guaranteed Stripped Mortgage Backed Securities] delivered in the exchange may be
exchanged back into the Securities representing equivalent entitlements for principal and interest.
For other Securities: The Securities surrendered for exchange must have aggregate Class Principal
Balances (exclusive of the Class Notional Balances of any [Class 2] Securities) and provide for
annual distributions of interest equal, after rounding to whole dollars, to the aggregate Class Principal
Balances] (exclusive of the Class Notional Balances of any [Class 2] Securities) and annual interest
distributions of the Securities received in any such exchange.
Each exchange may be effected only in proportions that result in the principal and interest
entitlements of the Securities received being equal to the entitlements of the Securities surrendered.
The following three examples illustrate the practically infinite capability for exchanges of Securities.
In each case, it is assumed that the exchanging Holder’s Securities are as follows:
Outstanding
Principal Balance
$10,000,000
$10,000,000
$10,000,000
$30,000,000
Class
Interest
Rate
Annual Interest
Distribution
7
11
21
2.5%
4.5%
9.5%
$ 250,000
$ 450,000
$ 950,000
$1,650,000
VI-6-3
Example 1.
Holder receives Class 5, Class 8, Class 14 and Class 23 Securities.
Outstanding
Principal Balance
$10,000,000
$ 5,000,000
$ 5,000,000
$10,000,000
$30,000,000
Example 2.
Interest
Rate
Annual Interest
Distribution
5
8
14
23
1.5%
3.0%
6.0%
10.5%
$ 150,000
$ 150,000
$ 300,000
$1,050,000
$1,650,000
Holder receives new Class 1 and Class 2 Securities.
Outstanding
Principal Balance
$30,000,000
$30,000,000 (notional)
$30,000,000
Example 3.
Class
Class
Interest
Rate
Annual Interest
Distribution
1
2
0.0%
5.5%
$
0
$1,650,000
$1,650,000
Holder receives MBS Securities and Class 1, Class 9 and Class 22 Securities.
Outstanding
Principal Balance
$ 5,000,000
$ 8,000,000
$ 5,000,000
$12,000,000
$30,000,000
Class
Ginnie Mae Platinum
Certificates
1
9
22
Interest
Rate
Annual Interest
Distribution
5.5%
$ 275,000
0.0%
3.5%
10.0%
$
0
$ 175,000
$1,200,000
$1,650,000
The aggregate Class Principal Balances of Securities of any particular Class outstanding at any time
may be expected to vary over the life of the Trust and will depend upon any exchanges that occur.
However, the aggregate Class Principal Balances of all Securities outstanding at any particular time
(exclusive of the Class Notional Balances of any Class 2 Securities) will always be equal to the
outstanding principal balance of the Ginnie Mae Platinum Certificate underlying such Securities and
the total distributions of interest required thereon will always be equal to the required distributions of
interest on such underlying Ginnie Mae Platinum Certificate.
AVAILABLE INFORMATION
You should purchase the securities only if you have read and understood the following documents:
•
this Offering Circular Supplement (this “Supplement”) and
•
the SMBS Base Offering Circular.
The SMBS Base Offering Circular is available on Ginnie Mae’s website located at
http://www.ginniemae.gov.
VI-6-4
If you do not have access to the internet, call The Bank of New York, which will act as information
agent for the Trust, at (800) 234-GNMA, to order copies of the SMBS Base Offering Circular.
Please consult the Glossary included in the Multiclass Securities Guide for definitions of capitalized
terms.
VI-6-5
TABLE OF CONTENTS
Page
Page
TERMS SHEET ................................7
ERISA MATTERS ..........................17
THE TRUST ASSET ........................ 9
LEGAL INVESTMENT
CONSIDERATIONS.......................17
GINNIE MAE GUARANTY ............9
PLAN OF DISTRIBUTION ............17
DESCRIPTION OF THE
SECURITIES .................................. 10
YIELD, MATURITY AND
PREPAYMENT
CONSIDERATIONS ...................... 12
INCREASE IN SIZE .......................18
LEGAL MATTERS.........................18
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES ................17
VI-6-6
TERMS SHEET
This terms sheet contains selected information for quick reference only. You should read this
Supplement, particularly “Risk Factors” on page [5] of the SMBS Base Offering Circular, and each
of the other documents listed under “Available Information.”
Sponsor: [Name of Sponsor]
Trustee: [Name of Trustee]
Tax Administrator: The Trustee
Closing Date: [ ] __, 20[ ]
Distribution Date: The 20th day of each month or, if the 20th day is not a Business Day, the first
Business Day thereafter, commencing in [ ]__, 20[ ].
Final Distribution Date: [ ]__, 20[ ]
Trust Asset:
Trust Asset Type
Certificate Rate
Original Term
To Maturity
(in years)
Principal
Balance
[Ginnie Mae Platinum
Certificate (_________) backed
by
Ginnie Mae II MBS Certificates]
[5.5]%
$[1,000,000,000]
[30]
Actual Characteristics of the Mortgage Loans Underlying the Trust Asset(1):
Principal Balance
Weighted
Average
Remaining Term
to Maturity
(in months)
Weighted
Average Loan
Age (in months)
Weighted Average
Mortgage Rate(2)
1
As of _____,20__.
2 The Mortgage Loans underlying the Trust Asset may bear interest at rates ranging from 0.25% to
1.50% per annum above the related Certificate Rate.
The actual remaining terms to maturity, loan ages and Mortgage Rates of many of the Mortgage
Loans underlying the Trust Asset will differ from the weighted averages shown above, perhaps
significantly. See “The Trust Asset -The Mortgage Loans” in this Supplement.
Range of Characteristics of the Ginnie Mae II Certificates Underlying the Trust Asset(1):
Weighted Average Remaining
Term to Maturity
(in months)
Weighted Average Loan
Age (in months)
Weighted Average Mortgage
Rate(2)
VI-6-7
1
As of _____,20__.
2 The Mortgage Loans underlying the Ginnie Mae II Certificates may bear interest at rates ranging
from 0.25% to 1.50% per annum above the related Certificate Rate.
The actual remaining terms to maturity, loan ages and Mortgage Rates of many of the Mortgage
Loans underlying the Ginnie Mae II Certificates may be outside the ranges of the weighted averages
shown above. See “The Trust Asset -The Mortgage Loans” in this Supplement.
Issuance of Securities: The Securities will be issued in book-entry form through the book-entry
system of the U.S. Federal Reserve Banks (the “Fedwire Book-Entry System”). See “Description of
the Securities — Form of Securities” in this Supplement.
Exchange: You will be able, upon notice and payment of an exchange fee, to exchange your
Securities for a proportionate interest in other Securities or for the underlying Trust Asset. See
“Description of the Securities —Exchange Procedures” in this Supplement.
Eligible Investors: The Securities are only to be offered and sold to institutional Accredited
Investors.
Interest Payments: On each Distribution Date, interest will be paid on each of the outstanding
Securities (other than Class 1, the Principal Only Security) in an amount equal to one-twelfth (1/12)
of the product of (i) the stated rate for such Security and (ii) the outstanding Class Principal Balance
or Class Notional Balance of such Security.
Allocation of Principal: On each Distribution Date, the Principal Distribution Amount will be
allocated among the outstanding Securities (other than [Class 2], the Notional Security) pro rata
based on the outstanding Class Principal Balance of each Security.
VI-6-8
THE TRUST ASSET
General
The Sponsor intends to acquire the Trust Asset in a privately negotiated transaction prior to the
Closing Date and to sell it to the Trust according to the terms of a SMBS Trust Agreement between
the Sponsor and the Trustee. The Sponsor will make certain representations and warranties with
respect to the Trust Asset. The Trust Asset will evidence, directly or indirectly, Ginnie Mae [ ]
Certificates.
The Trust MBS
The Trust Asset is a Ginnie Mae [Platinum Certificate backed by fixed rate Ginnie Mae II MBS
Certificates] and guaranteed by Ginnie Mae. See “The Ginnie Mae Certificates — General” in the
SMBS Base Offering Circular.
The Mortgage Loans
The Mortgage Loans underlying the Trust Asset will have the characteristics set forth in the Terms
Sheet under “Characteristics of the Mortgage Loans Underlying the Trust Asset” and the general
characteristics described in the SMBS Base Offering Circular. See “The Ginnie Mae Certificates —
General” in the SMBS Base Offering Circular.
Other than the parameters set forth in the Terms Sheet under “Characteristics of the Mortgage Loans
Underlying the Trust Asset,” specific information regarding the characteristics of the individual
Mortgage Loans is not available. For purposes of this Supplement, certain assumptions have been
made regarding the remaining terms to maturity, loan ages and Mortgage Rates of the Mortgage
Loans. However, the actual remaining terms to maturity, loan ages and Mortgage Rates of many of
the Mortgage Loans may differ from the characteristics presented in this Offering Circular
Supplement, perhaps significantly. Small differences in the characteristics of the Mortgage Loans
can have a significant effect on the yields of the Securities. See “Yield, Maturity and Prepayment
Considerations” in this Supplement and “Risk Factors” in the SMBS Base Offering Circular.
The Trustee Fee
On each Distribution Date, the Trustee will retain a fixed percentage of all principal and interest
distributions received on a group of specified assets separate from the Trust Asset in payment of its
fee.
GINNIE MAE GUARANTY
The Government National Mortgage Association (“Ginnie Mae”), a wholly-owned corporate
instrumentality of the United States of America within HUD, guarantees the timely payment of
principal and interest on the Securities. The General Counsel of HUD has provided an opinion to the
effect that Ginnie Mae has the authority to guarantee stripped mortgage-backed securities and that
Ginnie Mae guaranties will constitute general obligations of the United States, for which the full faith
and credit of the United States is pledged. See “Ginnie Mae Guaranty” in the SMBS Base Offering
Circular.
VI-6-9
DESCRIPTION OF THE SECURITIES
General
The description of the Securities contained in this Supplement is not complete and is subject to, and
is qualified in its entirety by reference to, all of the provisions of the SMBS Trust Agreement. See
“Description of the Securities” in the SMBS Base Offering Circular.
Form of Securities
Each Class of Securities will be issued and maintained, and may be transferred only on the Fedwire
Book-Entry System. Beneficial Owners of Book-Entry Securities will ordinarily hold these
Securities through one or more financial intermediaries, such as banks, brokerage firms and securities
clearing organizations that are eligible to maintain book-entry accounts on the Fedwire Book-Entry
System. See “Description of the Securities — Forms of Securities; Book-Entry Procedures” in the
SMBS Base Offering Circular.
Each Class will be issued in minimum dollar denominations of $100,000 and integral multiples of $1
in excess thereof, except that the minimum dollar denomination will not be greater than the then
authorized Class Principal Balance or Class Notional Balance.
Distributions
Distributions on the Securities will be made on each Distribution Date as specified under “Terms
Sheet — Distribution Date” in this Supplement. On each Distribution Date, the Distribution Amount
will be distributed to the Holders of record as of the close of business on the last Business Day of the
calendar month immediately preceding the month in which the Distribution Date occurs. Beneficial
Owners of Book-Entry Securities will receive distributions through credits to accounts maintained
for their benefit on the books and records of the appropriate financial intermediaries. See
“Description of the Securities — Distributions” and “—Method of Distributions” in the SMBS Base
Offering Circular.
Interest Distributions
The Interest Distribution Amount will be distributed on each Distribution Date to the Holders of all
Classes of Securities entitled to distributions of interest.
•
Interest will be calculated on the basis of a 360-day year consisting of twelve 30-day months.
•
Interest distributable on any Class for any Distribution Date will consist of 30 days’ interest on its
Class Principal Balance (or Class Notional Balance) as of the related Record Date.
•
Investors can calculate the amount of interest to be distributed on each Class of Securities for any
Distribution Date by using the Series Factors published in the preceding month. See “—Series
Factors” below.
VI-6-10
Principal Distributions
The Principal Distribution Amount for each Class of Securities will be distributed to the Holders
entitled thereto as described under “Terms Sheet—Allocation of Principal” in this Supplement.
Investors can calculate the amount of principal to be distributed with respect to any Distribution Date
by using the Series Factors published in the preceding and current months. See “—Series Factors”
below.
Notional Class
The Notional Class ([Class 2]) will not receive principal distributions. The Class Notional Balance
of the [Class 2] Securities will be reduced after each Distribution Date by the Principal Distribution
Amount for that Distribution Date.
Series Factors
The Trustee will calculate and make available for the Securities, no later than the day preceding the
Distribution Date, the factor (carried out to eight decimal places) that, when multiplied by the
Original Class Principal Balance (or original Class Notional Balance) of any Class, determines the
Class Principal Balance (or Class Notional Balance) after giving effect to the distribution of principal
to be made on the Securities or any reduction of Class Notional Balance on that Distribution Date
(each, a “Series Factor”).
•
The Series Factor for the Securities for the month following the issuance of the Securities will
reflect the aggregate remaining Class Principal Balance (exclusive of the Class Notional Balance
of the Class 2 Securities) after giving effect to any principal distributions to be made on the
Distribution Date occurring in that month.
•
The Series Factor for the month of issuance is 1.00000000.
•
Based on the Series Factor published in the preceding and current month (and Interest Rates),
investors in any Class can calculate the amount of principal and interest to be distributed to that
Class on the Distribution Date in the current month.
•
Investors may obtain the current Series Factor on e-Access.
See “Description of the Securities — Distributions” in the SMBS Base Offering Circular.
[Trading
For the sole purpose of facilitating trading and settlement, the Principal Only Class will be treated as
a non-delay class.]
Exchange Procedures
A Beneficial Owner proposing to effect an exchange of any of the Securities for other Securities
issued by the Trust or for the Ginnie Mae Platinum Certificate as described more fully herein under
“—Exchanges” or vice versa must notify the Trustee through the Beneficial Owner’s Book-Entry
Depository participant. This notice must be received by the Trustee not later than two Business Days
VI-6-11
before the proposed exchange date. The exchange date can be any Business Day other than the last
Business Day of the month. The notice must contain the outstanding Class Principal Balances and
Class Notional Balances of the Securities to be included in the exchange and the proposed exchange
date. The notice is required to be delivered to the Trustee in writing at its Corporate Trust Office at
[___________________________________________], Attention: [_________________]. The
Trustee may be contacted by telephone at [_________________] and by fax at
[_________________].
No fee will be payable for any exchanges occurring prior to and including [ ]__, 20[ ]. For each
exchange effected after [ ]__, 20[ ] a fee will be payable to the Trustee in connection with each
exchange equal to 1/32 of 1% of the outstanding principal balance of the Securities surrendered for
exchange (but not less than $2,000 or more than $25,000). [Note to Trust Counsel: No exchange
fee will be payable for the period from the Closing Date to the last business day of the third month
from the month in which the Closing Date occurs]. The fee must be paid concurrently with the
exchange.
The first distribution on a Security received in an exchange will be made on the Distribution Date in
the month following the month of the exchange. The distribution will be made to the Holder of
record as of the Record Date in the month of exchange.
See “Description of the Securities — Exchange of Certain Classes of SMBS Securities for other
SMBS Securities” and “Exchanges of SMBS Securities for Ginnie Mae Certificates” in the
SMBS Base Offering Circular.
YIELD, MATURITY AND PREPAYMENT CONSIDERATIONS
General
The prepayment experience of the Mortgage Loans underlying the Trust Asset will affect the
Weighted Average Lives of and the yields realized by investors in the related Securities.
•
The Mortgage Loans do not contain “due-on-sale” provisions, and any Mortgage Loan may be
prepaid in full or in part at any time without penalty.
•
The rate of payments (including prepayments and payments in respect of liquidations) on the
Mortgage Loans is dependent on a variety of economic, geographic, social and other factors,
including prevailing market interest rates and general economic factors.
The rate of prepayments with respect to single-family mortgage loans has fluctuated significantly in
recent years. Although there is no assurance that prepayment patterns for the Mortgage Loans will
conform to patterns for more traditional types of conventional fixed-rate mortgage loans, generally:
•
if mortgage interest rates fall materially below the Mortgage Rates on any of the Mortgage Loans
(giving consideration to the cost of refinancing), the rate of prepayment of those Mortgage Loans
would be expected to increase; and
•
if mortgage interest rates rise materially above the Mortgage Rates on any of the Mortgage Loans,
the rate of prepayment of those Mortgage Loans would be expected to decrease.
VI-6-12
In addition, following any Mortgage Loan default and the subsequent liquidation of the underlying
Mortgaged Property, the principal balance of the Mortgage Loan will be distributed through a
combination of liquidation proceeds, advances from the related Ginnie Mae Issuer and, to the extent
necessary, proceeds of Ginnie Mae’s guaranty of the Securities. As a result, defaults experienced on
the Mortgage Loans will accelerate the distribution of principal of the Securities.
Assumability
Each Mortgage Loan may be assumed, subject to HUD review and approval, upon the sale of the
related Mortgaged Property. See “Yield, Maturity and Prepayment Considerations — Assumability
of Government Loans” in the SMBS Base Offering Circular.
Final Distribution Date
The Final Distribution Date in respect of each Class, which is set forth on the cover page of this
Supplement, is the latest date on which the related Class Principal Balance or Class Notional Balance
will be reduced to zero. According to the terms of the Ginnie Mae Guaranty, Ginnie Mae will
guarantee payment in full of the Class Principal Balance of each Class of Securities no later than the
Final Distribution Date.
Yield Considerations
An investor seeking to maximize yield should make a decision whether to invest in any Class based
on the anticipated yield of that Class resulting from its purchase price and the investor’s own
projection of Mortgage Loan prepayment rates under a variety of scenarios. No representation is
made regarding Mortgage Loan prepayment rates or the yield of any Class.
Prepayments: Effect on Yields
The yields to investors will be sensitive in varying degrees to the rate of prepayments on the
Mortgage Loans.
•
In the case of Securities purchased at a premium (especially the Notional Class), faster than
anticipated rates of principal payments could result in actual yields to investors that are lower than
the anticipated yields.
•
Investors in the Notional Class should also consider the risk that rapid rates of principal payments
could result in the failure of investors to recover fully their investments.
•
In the case of Securities purchased at a discount (especially the Principal Only Class), slower than
anticipated rates of principal payments could result in actual yields to investors that are lower than
the anticipated yields.
See “Risk Factors—Rates of principal payments can reduce your yield” in the SMBS Base
Offering Circular.
Rapid rates of prepayments on the Mortgage Loans are likely to coincide with periods of low
prevailing interest rates.
VI-6-13
During periods of low prevailing interest rates, the yields at which an investor may be able to reinvest
amounts received as principal payments on the investor’s Class of Securities may be lower than the
yield on that Class.
Slow rates of prepayments on the Mortgage Loans are likely to coincide with periods of high
prevailing interest rates.
During periods of high prevailing interest rates, the amount of principal payments available to an
investor for reinvestment at those high rates may be relatively low.
The Mortgage Loans will not prepay at any constant rate until maturity, nor will all of the Mortgage
Loans underlying the Trust Asset prepay at the same rate at any one time. The timing of changes in
the rate of prepayments may affect the actual yield to an investor, even if the average rate of principal
prepayments is consistent with the investor’s expectation. In general, the earlier a prepayment of
principal on the Mortgage Loans the greater the effect on an investor’s yield. As a result, the effect
on an investor’s yield of principal prepayments occurring at a rate higher (or lower) than the rate
anticipated by the investor during the period immediately following the Closing Date is not likely to
be offset by a later equivalent reduction (or increase) in the rate of principal prepayments.
Modeling Assumptions
Unless otherwise indicated, the table presented in “—Yield Table” below has been prepared on the
basis of the following assumptions (the “Modeling Assumptions”), among others:
1. The Mortgage Loans underlying the Trust Asset have the characteristics shown under
“Characteristics of the Mortgage Loans Underlying the Trust Asset” in the Terms
Sheet except in the case of information set forth under the 0% PSA Prepayment
Assumption Rate, for which each Mortgage Loan is assumed to have an original and
a remaining term to maturity of 360 months and, in the case of a Ginnie Mae II
Certificate, a Mortgage Rate of 1.5% per annum higher than the related Certificate
Rate.
2. The Mortgage Loans prepay at the constant percentages of PSA (described below)
shown in the related table.
3. Distributions on the Securities are always received on the 20th day of the month,
whether or not a Business Day, commencing in[ ] 20[ ].
4. The Closing Date for the Securities is [ ] __, 20[ ].
5. No expenses or fees are paid by the Trust other than the Trustee Fee.
When reading the tables and the related text, investors should bear in mind that the Modeling
Assumptions, like any other stated assumptions, are unlikely to be entirely consistent with actual
experience.
•
For example, most of the Mortgage Loans will not have the characteristics assumed, many
Distribution Dates will occur on a Business Day after the 20th of the month.
VI-6-14
•
In addition, distributions on the Securities are based on Certificate Factors and Calculated
Certificate Factors, if applicable, which may not reflect actual receipts on the Trust Asset.
See “Description of the Securities—Distributions” in the SMBS Base Offering Circular.
Yield Table
The following table shows the pre-tax yields to maturity on a corporate bond equivalent basis of all
of the Securities at various constant percentages of PSA.
The Mortgage Loans will not prepay at any constant rate until maturity. Moreover, it is likely that
the Mortgage Loans will experience actual prepayment rates that differ from those of the Modeling
Assumptions. Therefore, the actual pre-tax yield of any Class may differ from those shown in
the applicable table below for that Class even if the Class is purchased at the assumed price
shown.
The yields were calculated by
1. determining the monthly discount rates that, when applied to the applicable assumed
streams of cash flows to be paid on the applicable Class, would cause the discounted
present value of the assumed streams of cash flows to equal the assumed purchase
price of that Class plus accrued interest (in the case of interest-bearing Classes), and
2. converting the monthly rates to corporate bond equivalent rates.
These calculations do not take into account variations that may occur in the interest rates at which
investors may be able to reinvest funds received by them as distributions on their Securities and
consequently do not purport to reflect the return on any investment in any Class when those
reinvestment rates are considered.
The information set forth in the following table was prepared on the basis of the Modeling
Assumptions and the assumption that the purchase price of each Class (expressed as a percentage of
its original Class Principal Balance or Class Notional Balance) plus accrued interest (in the case of
the interest-bearing Classes) is as indicated in the table. The assumed purchase price is not
necessarily that at which actual sales will occur.
VI-6-15
YIELD TABLE
PSA Percentages
SMBS
Securities
Annual
Interest
Rate
[Class 1]
[PO (0.0%)]
[Class 2]
[IO (5.5%)]
CUSIP
Assumed
Price
0%
150%
300%
600%
900%
VI-6-16
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended that the Trust qualify as a “grantor trust” under subpart E, part I of Subchapter J of the
Code for federal income tax purposes. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of the purchase,
ownership and disposition or the exchange of any Securities. See “Certain Federal Income Tax
Consequences” in the SMBS Base Offering Circular.
ERISA MATTERS
Ginnie Mae guarantees distributions of principal and interest with respect to the Securities. The
Ginnie Mae Guaranty is supported by the full faith and credit of the United States of America. The
Securities will qualify as “guaranteed governmental mortgage pool certificates” within the meaning
of a Department of Labor regulation, the effect of which is to provide that mortgage loans and
participations therein underlying a “guaranteed governmental mortgage pool certificate” will not be
considered assets of an employee benefit plan subject to the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), or subject to section 4975 of the Code (each, a “Plan”), solely
by reason of the Plan’s purchase and holding of that certificate.
Governmental plans and certain church plans, while not subject to the fiduciary responsibility
provisions of ERISA or the prohibited transaction provisions of ERISA and the Code, may
nevertheless be subject to local, state or other federal laws that are substantially similar to the
foregoing provisions of ERISA and the Code. Fiduciaries of any such plans should consult with their
counsel before purchasing any of the Securities.
Prospective Plan Investors should consult with their advisors, however, to determine whether the
purchase, holding, or resale of a Security could give rise to a transaction that is prohibited or is not
otherwise permissible under either ERISA or the Code.
See “ERISA Considerations” in the SMBS Base Offering Circular.
LEGAL INVESTMENT CONSIDERATIONS
Institutions whose investment activities are subject to legal investment laws and regulations or to
review by certain regulatory authorities may be subject to restrictions on investment in the Securities.
No representation is made about the proper characterization of any Class for legal investment
or other purposes, or about the permissibility of the purchase by particular investors of any
Class under applicable legal investment restrictions.
Investors should consult their own legal advisors regarding applicable investment restrictions and the
effect of any restrictions on the liquidity of the Securities prior to investing in the Securities.
See “Legal Investment Considerations” in the SMBS Base Offering Circular.
PLAN OF DISTRIBUTION
Subject to the terms and conditions of the Sponsor Agreement, the Sponsor has agreed to purchase
all of the Securities if any are sold and purchased. The Sponsor proposes to offer Securities to
VI-6-17
institutional Accredited Investors from time to time for sale in negotiated transactions at varying
prices to be determined at the time of sale. The Sponsor may effect these transactions by sales to or
through certain securities dealers. These dealers may receive compensation in the form of discounts,
concessions or commissions from the Sponsor and/or commissions from any purchasers for which
they act as agents. Some of the Securities may be sold through dealers in relatively small sales. In
the usual case, the commission charged on a relatively small sale of securities will be a higher
percentage of the sales price than that charged on a large sale of securities.
INCREASE IN SIZE
Before the Closing Date, Ginnie Mae, the Trustee and the Sponsor may agree to increase the size of
this offering. In that event, the Securities will have the same characteristics as described in this
Supplement, except that the Original Class Principal Balance (and original Class Notional Balance, if
any) will increase by the same proportion. The SMBS Trust Agreement, the Final Data Statement
and the Supplemental Statement, if any, will reflect any increase in the size of the transaction.
LEGAL MATTERS
Certain legal matters will be passed upon for Ginnie Mae by __________________, and
__________________ , for the Trust by __________________ and _________________________
and for the Trustee by ______________________.
VI-6-18
[THIS PAGE INTENTIONALLY LEFT BLANK]
VI-6-19
[1,000,000,000]
Government National
Mortgage Association
GINNIE MAE®
Guaranteed Stripped Mortgage-Backed Securities
Ginnie Mae SMBS Trust [
]
____________________________________________
OFFERING CIRCULAR SUPPLEMENT
____________, 20___
___________________________________________
[
]
VI-6-20
FORM OF ACCOUNTANTS’ AGREED-UPON PROCEDURES
LETTER CONCERNING THE OFFERING CIRCULAR FOR SMBS TRANSACTIONS
___________ __, 20__
[Sponsor]
[Co-Sponsor]
Government National Mortgage Association
550 Twelfth Street, SW
Washington, D.C. 20024
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
Guaranteed Stripped Mortgage-Backed Securities Trust [ ]
Ladies and Gentlemen:
“We have performed the procedures enumerated below, which were agreed to by the addressees,
relating to the recomputation of certain information (which is the responsibility of the Sponsor and is
identified below) included in the Offering Circular Supplement dated [ ] (the “Supplement”) to the
SMBS Base Offering Circular dated April 1, 2008, relating to the offering of $[ ] aggregate Original
Class Principal Balance of Guaranteed Stripped Mortgage-Backed Securities Ginnie Mae SMBS
Trust [ ] (the “Securities”). This agreed-upon procedures engagement was conducted in accordance
with attestation standards established by the American Institute of Certified Public Accountants. The
sufficiency of these procedures is solely the responsibility of the addressees. Consequently, we make
no representations regarding the sufficiency of the procedures described below either for the purpose
for which this report has been requested or for any other purpose. Capitalized terms used but not
defined in this report have the meanings ascribed to them in the Supplement.
We are independent certified public accountants with respect to Ginnie Mae SMBS Trust [ ] within
the meaning of Rule 101 of the Rules of Conduct of the Code of Professional Conduct of the
American Institute of Certified Public Accountants.
VI-7-1
For purposes of this report, we have obtained:
the Supplement;
the attached listing of the Ginnie Mae II Certificates underlying the Trust Asset provided to us by
the Information Agent (“Schedule A”); and
the attached listing of CUSIP Numbers for each Class of Securities provided to us by Standard &
Poor’s CUSIP Service Bureau (the “CUSIP Listing”).
In addition, using the Modeling Assumptions and the terms of the Securities set forth in the
Supplement, we have performed the following procedures with respect to the information set forth
under each of the captions below.
Page S-5 – Actual Characteristics of the Mortgage Loans Underlying the Trust Asset:
We calculated the weighted averages of the Weighted Average Remaining Term to Maturity (the
“WARM”), the Weighted Average Loan Age (the “WALA”) and the Weighted Average Coupon
(the “WAC”) of the Ginnie Mae [ ] Certificates underlying the Trust Asset shown on Schedule A.
We compared such recomputed weighted averages to the corresponding weighted averages shown in
the table and found them to be in agreement.
Page S-6 – Range of Characteristics of the Ginnie Mae II Certificates Underlying the Trust
Asset:
We determined the minimum and maximum (“Range”) of the WARM, WALA and WAC of the
Ginnie Mae [ ] Certificates underlying the Trust Asset from the information shown on Schedule A.
We compared such Ranges to the corresponding Ranges shown in the table and found them to be in
agreement.
Page S-12 - CUSIP Number:
For each Class of Securities, we compared the CUSIP Number shown in the table to the CUSIP
Number for such Class shown in the CUSIP Listing and found them to be in agreement.
Page S-12 - Yield Tables:
Using the assumed purchase prices set forth in the yield table, we recomputed the pre-tax yield to
maturity (corporate bond equivalent) of each indicated Class at each constant percentage of PSA
shown in the table. We compared such recomputed yields to the corresponding yields shown in the
table and found them to be in agreement.
*****
Using the Modeling Assumptions and the terms of the Securities set forth in the Supplement and
assuming (i) the timely payment of principal and interest on the Trust Assets, (ii) that no taxes are
imposed on the Trust and (iii) that no expenses are incurred, we determined that payments on the
VI-7-2
Trust Assets would be adequate to make full and timely payments of principal and interest on the
Securities regardless of the rate of prepayments of the Mortgage Loans underlying the Trust Assets.
It should be understood that we make no representations as to (a) questions of legal interpretation; (b)
the sufficiency for your purposes of the procedures enumerated in the preceding paragraphs; (c) the
accuracy of the information reported in the CUSIP Listing or on Schedule A; or (d) whether the
actual payments on the Trust Assets and the Securities will correspond to the payments calculated in
accordance with the assumptions and methodology set forth in the Supplement. We were not
engaged to, and did not perform an examination, the objective of which would be the expression of
an opinion on the above information. Accordingly, we do not express such an opinion. Had we
performed additional procedures, other matters might have come to our attention that would have
been reported to you. Further, we have addressed ourselves solely to the foregoing data as set forth
in the Supplement and we make no representations as to the adequacy of disclosure or as to whether
any material facts have been omitted.
This report is solely for the information and use of the addressees and Ginnie Mae’s Financial
Advisor in connection with the offering of the Securities covered by the Supplement, and is not
intended to be and should not be used by anyone other than these specified parties. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose, including but not limited to
the purchase or sale of the Securities, nor is it to be filed with or referred to in whole or in part in the
Supplement or any other document, except that reference may be made to it in the Sponsor
Agreement or in any list of closing documents pertaining to the offering of the Securities.”
Yours truly,
VI-7-3
FORM OF GUARANTY AGREEMENT FOR SMBS TRANSACTIONS
VI-8-0
GINNIE MAE SMBS SECURITIES GUARANTY AGREEMENT
Pursuant to Section 306(g) of the National Housing Act, the Government National Mortgage
Association (“Ginnie Mae”) hereby guarantees the timely payment of principal and interest on the
Ginnie Mae SMBS Securities in accordance with the terms as established by the Trust Agreement,
dated as of [______________,] 20__, relating to Ginnie Mae SMBS Trust [___] (the “SMBS Trust
Agreement”).
Ginnie Mae hereby authorizes the Trustee under each Trust Agreement to issue the Securities
provided for issuance thereunder, each of which Security shall be entitled to the benefits of the
guaranty set forth below:
GUARANTY: THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION,
PURSUANT TO SECTION 306(g) OF THE NATIONAL HOUSING ACT,
GUARANTEES THE TIMELY PAYMENT OF PRINCIPAL AND INTEREST ON
THIS SECURITY IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET
FORTH HEREIN AND IN THE SMBS TRUST AGREEMENT. THE FULL FAITH
AND CREDIT OF THE UNITED STATES OF AMERICA IS PLEDGED TO THE
PAYMENT OF ALL AMOUNTS THAT MAY BE REQUIRED TO BE PAID UNDER
THIS GUARANTY.
Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in
the SMBS Trust Agreement.
IN WITNESS WHEREOF, Ginnie Mae has executed and delivered this Guaranty Agreement as of
the date set forth below.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
By:_________________________________________________
Dated: ____________________
VI-8-1
FORM OF ISSUANCE STATEMENT FOR SMBS TRANSACTIONS
VI-9-0
ISSUANCE
STATEMENT
[Trustee]
Ginnie Mae SMBS Trust 20[ ] - [ ]]
The Sponsor hereby instructs the Trustee, on behalf of the Ginnie Mae SMBS Trust, to authorize the
issuance of the Securities identified in Schedule A (the “Schedule”) in book-entry form through the
facilities of the Book-Entry Depository for the account of the Sponsor on the Closing Date. The
Securities shall be issued in the denominations specified in the Schedule under the column
designated as “DENOMINATION (OR “PAR AMOUNT”) TO BE ISSUED AT CLOSING)”.
The undersigned acknowledges that the Schedule accurately describes the Securities to be issued in
book-entry form at closing.
[Sponsor]
By:
Its:
[Note to Trust Counsel: The Issuance Statement must be provided to the Trustee no later than the
Pool Wire Date, which is generally two Business Days prior to closing.]
V-9-1
SCHEDULE A: SMBS CLASSES
CLASS
DENOMINATION (OR
"PAR AMOUNT")
TO BE ISSUED
AT CLOSING
†
MAXIMUM
CLASS PRINCIPAL (OR
NOTIONAL) BALANCE
CUSIP
†
________________________________
†
Notional balance.
1
The sixteenth day of each month or, if the sixteenth day is not a Business Day, the
first Business Day thereafter.
2
The twentieth day of each month or, if the twentieth day is not a Business Day,
the first Business Day following the twentieth day.
3
[OTHER].
VI-9-2
FORM OF TRUSTEE’S RECEIPT AND SAFEKEEPING AGREEMENT
FOR SMBS TRANSACTIONS
VI-10-0
TRUSTEE’S RECEIPT AND SAFEKEEPING AGREEMENT
____________ __, 20__
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
[Sponsor’s Name] (the “Sponsor”)
[Sponsor’s Address]
Ginnie Mae SMBS Trust 20
Ladies and Gentlemen:
___________________________, as trustee (the “Trustee”) under a trust agreement (the “SMBS
Trust Agreement”), dated as of _______________ __, 20___, between the Trustee and
______________ (the “Sponsor”), acknowledges receipt of the Trust Assets listed on Schedule A
attached to this letter (the “Trust Assets”). Capitalized terms not otherwise defined herein shall have
the meanings assigned to them in the glossary contained in the Ginnie Mae Multiclass Securities
Guide currently in effect.
The Trustee has received the Trust Assets through the facilities of [
] (the “ Trust
Asset Depository”), which has credited the Trust Assets to a limited purpose account at the Trust
Asset Depository.[Note to Trust Counsel: If the Trust Assets include any Trust MBS, Underlying
SMBS Securities or Underlying Certificates that are held in the book-entry facilities of more than one
depository, identify such other depositories].
The Trustee confirms that it is holding, and at all times prior to settlement on
_____________________ __, 20__ (the “Closing Date”) will hold, the Trust Assets in one or more
segregated accounts in the name of and solely for the benefit of [the Sponsor] [the Sponsor’s
Participating Affiliates]. The Trustee has made appropriate entries on its books and records to show
that it is so holding the Trust Assets, and the Trust Assets are not subject to any right, charge, security
interest, lien or claim of any kind in favor of the Trustee or any Person claiming through it.
All of the Trust Assets, described in the attached list and having an aggregate [original] [current] face
value of $________________, are held by the Trustee as the Sponsor’s agent and subject to the
Sponsor’s further instructions. In the event that there is no settlement on the Closing Date, the
Trustee will release the Trust Assets in accordance with the instructions of the [Sponsor or its
Participating Affiliates].
Upon settlement (if any) on the Closing Date, the Trustee will deliver in accordance with the
instructions of the [Sponsor] the securities representing the Ginnie Mae SMBS Trust 20__-_
Guaranteed Stripped Mortgage-Backed Securities, and the Trustee thereupon will hold the Trust
Assets in the name of and solely on behalf of the Ginnie Mae SMBS Trust 20___-__.
VI-10-1
*
*
*
*
*
Unless otherwise instructed by the Sponsor, if any distributions on the Trust Assets are received by
the Trustee prior to settlement on the Closing Date, the Trustee will remit such distributions to the
Sponsor.
Very Truly Yours,
[TRUSTEE], as Trustee
By: ________________
Its: _______________
cc:
[Accountants’ Name]
[Accountants’ Address]
VI-10-2
FORM OF CLOSING FLOW OF FUNDS LETTER
FOR SMBS TRANSACTIONS
VI-11-0
CLOSING FLOW OF FUNDS INSTRUCTION LETTER
REGARDING THE TRANSFER OF FUNDS
BY THE SPONSOR TO THE TRUSTEE
AND THE SUBSEQUENT DISBURSEMENT OF FUNDS
BY THE TRUSTEE TO GINNIE MAE
____________ __, 20___
[Trustee]
Ginnie Mae SMBS Trust 20
Ladies and Gentlemen:
Reference is hereby made to the above-referenced transaction which is scheduled to close on the date
hereof (the “Closing Date”). On the Closing Date, using a delivery versus payment function,
simultaneously upon transfer to us (or our designee) of the Class ____ Securities [Note To Trust
Counsel: Insert the name of an SMBS Security to be issued as of the Closing Date] of the abovereferenced trust, we shall transfer to you $__________, which shall be disbursed to Ginnie Mae to
cover the fees and expenses of those persons who are to be paid from the proceeds of the transaction.
We hereby instruct you to disburse such amount to Ginnie Mae via pay.gov.
*
*
*
*
*
*
VI-11-1
If any questions, please call Ginnie Mae’s Treasurer’s division at (202) 708-2257.
Very truly yours,
[Sponsor]
By:______________________________
Its:______________________________
cc:
Ginnie Mae
Treasurer’s Division
(202) 485-0222 (Fax)
VI-11-2
FORM OF TRUST AGREEMENT FOR SMBS TRANSACTIONS
VI-12-0
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GUARANTEED STRIPPED MORTGAGE-BACKED SECURITIES
GINNIE MAE SMBS TRUST [
]
TRUST AGREEMENT
between
______________________________,
as Sponsor,
and
_____________________________,
as Trustee
DATED AS OF
____________ __, 20__
VI-12-1
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of ______________ __, 2___, is entered into by and
between _____________________________________ , a ______________________ corporation
(the “Sponsor”), and _____________________________, a _______________ banking corporation,
as trustee (the “Trustee”).
Section 1. Standard Trust Provisions. The Standard Trust Provisions for Ginnie Mae
SMBS Trusts dated as of April 1, 2008 (the “SMBS Standard Trust Provisions”) are herein
incorporated by reference and shall be considered a part of this Trust Agreement as if set forth
herein in full.
Section 2. Defined Terms. Capitalized terms used in this Trust Agreement shall have
the meanings set forth below and in Article I of the SMBS Standard Trust Provisions, provided
that the meanings below shall be controlling in the case of any conflict with the SMBS Standard
Trust Provisions. Capitalized terms used and not otherwise defined in this Trust Agreement shall
have the meanings assigned to them in the Glossary contained in the Ginnie Mae Multiclass
Securities Guide, _________, 20_ Edition as supplemented by the glossary in the Base Offering
Circular for Guaranteed Stripped Mortgage-Backed Securities dated _____, 20__, the Terms
Sheet in the 20__-__ Offering Circular Supplement attached hereto as Schedule [ ]; provided that
the definitions in such Glossary which themselves use capitalized terms defined in this Trust
Agreement will be interpreted using the meaning for such capitalized terms set forth in this Trust
Agreement.
Closing Date: [________________, 20___.
Corporate Trust Office: [_____________________].
Co-Trust Counsel: _____________________.
Distribution Date: [The 15th day of each month or if the 15th day is not a Business Day, the first
Business Day, the first Business Day thereafter, commencing in ____________ 20___.] [The 20th
day of each month or if the 20th day is not a Business Day, the first Business Day thereafter,
commencing in ______________20___].
Final Data Statement: The statement attached to the Accountants’ Agreed-Upon Procedures Letter
as of the Closing Date as Schedule A, a copy of which is attached hereto. The Final Data Statement
separately identifies the Trust Assets in each Trust Asset Group and the Group T Trust Assets.
Group T Trust Assets: The assets underlying Group T, as identified on Schedule A.
Offering Circular Supplement: The Offering Circular Supplement for Ginnie Mae SMBS Trust [
], dated
, 20__.
Registrar: The Trustee.
Sponsor: The entity identified as such on the cover page hereof.
VI-12-2
Sponsor Agreement: The Sponsor Agreement relating to the Ginnie Mae SMBS Trust [
between the Sponsor and Ginnie Mae, dated _________ __, 20__.
], by and
Tax Administrator: The Trustee.
Trust Assets: Collectively, the certificates listed in the Final Data Statement.
Trust Counsel: ______________________________.
Trustee: The entity identified as such on the cover page hereof, or its successor in interest, or any
successor trustee appointed as herein provided.
Trustee Fee: All principal and interest distributions on the Group T Trust Assets.
Trust Fund: The corpus of the trust established hereby, consisting of: (a) the Trust Assets and all
distributions thereon on or after the first day of the month following the month in which the Closing
Date occurs, (b) all of the Sponsor’s right, title and interest in, but none of the Sponsor’s obligations
under, the Sponsor Agreement, (c) the Trust Accounts, and (d) any proceeds of the foregoing.
Section 3. Conveyance to the Trustee. In consideration of all of the Securities issued
hereunder, the receipt of which is hereby acknowledged by the Sponsor, the Sponsor does hereby
sell, assign, transfer and convey to the Trustee, in trust for the benefit of the Holders, all of the
Sponsor’s right, title and interest in and to the Trust Fund.
Section 4. Acceptance by the Trustee. By its execution of this Trust Agreement, the
Trustee acknowledges receipt of the Trust Fund and declares that it holds and will hold the Trust
Fund in trust for the exclusive use and benefit of all present and future Holders pursuant to the
terms of this Trust Agreement. The Trustee represents and warrants that (a) the Trust Assets
have been issued to the Trustee, (b) the Trustee acquired the Trust Assets on behalf of the Trust
from the Sponsor in good faith, for value, and without notice or knowledge of any adverse claim,
lien, charge, encumbrance or security interest (including, without limitation, federal tax liens or
liens arising under ERISA), (c) except as permitted in this Trust Agreement, the Trustee has not
and will not, in any capacity, assert any claim or interest in the Trust Assets, and (d) the Trustee
has not encumbered or transferred its right, title or interest in the Trust Assets.
Section 5. The Securities.
The Securities will be designated generally as Ginnie Mae Guaranteed Stripped Mortgage-Backed
Securities, Series [ ]. The (i) designation, (ii) Original Class Principal Balance (or original Class
Notional Balance), (iii) Interest Rate, (iv) Interest Type and (v) Principal Type for the [Class 1 and
Class 2] Securities are set forth on the cover page of the Offering Circular Supplement attached
hereto as Schedule A. The (i) designation, (ii) Interest Rate and (iii) CUSIP Number for the
Securities are set forth on Schedule B hereto. The Final Distribution Date for each Class of Security
is set forth in the Terms Sheet of the Offering Circular Supplement attached hereto as Schedule A.
The Securities shall be issued in book-entry form in the denominations specified in the Issuance
Statement attached hereto as Exhibit 1.
VI-12-3
Section 6. Distributions to Holders. On each Distribution Date, the Trustee (or the
Paying Agent on behalf of the Trustee) shall withdraw the Distribution Amount for each Class
from the Trust Accounts in accordance with Section 4.03 and Section 4.04 of the SMBS
Standard Trust Provisions and shall distribute such amount on a pro rata basis among the
Outstanding Securities of such Class.
Section 7. Modification of the SMBS Standard Trust Provisions. The following
modifications of the SMBS Standard Trust Provisions shall apply to the Securities:
[NONE]
[Insert other modifications, if necessary]
[NOTE TO TRUST COUNSEL: INCLUDE THE FOLLOWING LANGUAGE REGARDING
THE WAIVER OF ANY EXCHANGE FEE FOR THE FIRST THREE MONTH PERIOD
COMMENCING WITH THE CLOSING DATE:
The fifth paragraph of Section 3.04 is amended as follows:
No fee will be payable for any exchanges occurring prior to and including October 28, 2004. For
each exchange effected after October 28, 2004, a fee will be payable to the Trustee in connection
with each exchange equal to [1/64 of 1%] of the outstanding principal balance of the Securities
surrendered for exchange (but not less than $2,000 or more than $25,000).]
Section 8. Schedules and Exhibits. Each of the Schedules and Exhibits attached hereto
or referenced herein is incorporated herein by reference.
* * * * *
VI-12-4
IN WITNESS WHEREOF, the Sponsor and the Trustee have caused this Trust Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day and year first above
written.
[SPONSOR]
By: ____________________________________
Its: _____________________________________
[TRUSTEE], as Trustee
By: ____________________________________
Its: _____________________________________
VI-12-5
STATE OF NEW YORK
)
) ss.:
COUNTY OF __________
)
The foregoing instrument was acknowledged before me in the County of _________,
____________, this ____ day of ______________, 20__, by _______________________,
_____________ of ______________________, a __________________ [corporation], on behalf of
the [corporation].
_______________________________
Notary Public
My Commission expires: _________________
VI-12-6
STATE OF ________________
)
) ss.:
COUNTY OF ______________
)
The foregoing instrument was acknowledged before me in the County of __________,
_______________, this ____ day of ________________, 20__, by ________________,
____________ of _______________________, a ___________________ [banking corporation], on
behalf of the [corporation].
_______________________________
Notary Public
My Commission expires: _________________
VI-12-7
LIST OF SCHEDULES AND EXHIBITS
Schedule A:
Front Cover and Terms Sheet of Offering Circular Supplement
Schedule B:
Securities Information
Exhibit 1:
Issuance Statement
VI-12-8
______________________________________________________________________________
STANDARD TRUST PROVISIONS
FOR GINNIE MAE SMBS TRUSTS
______________________________
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
GUARANTEED STRIPPED MORTGAGE-BACKED SECURITIES
____________
April 1, 2008 Edition
______________________________________________________________________________
VI-13-1
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ............................................................................................................4
ARTICLE II ESTABLISHMENT OF TRUST ...............................................................................5
Section 2.01
Establishment of Trust. ....................................................................................5
Section 2.02
Conveyance of Trust Assets.............................................................................5
Section 2.03
Registration of Trust Assets.............................................................................5
Section 2.04
Delivery of Securities. .....................................................................................5
Section 2.05
Board Approval of Trust Agreement. ..............................................................5
Section 2.06
Separate Grantor Trusts. ..................................................................................6
ARTICLE III THE SECURITIES ...................................................................................................6
Section 3.01
Forms and Denominations of Securities. .........................................................6
Section 3.02
Method of Distribution. ...................................................................................6
Section 3.03
Authorization, Issuance and Delivery of Securities.........................................6
Section 3.04
Registration of Securities.................................................................................7
Section 3.05
Exchange of Securities for Trust MBS ............................................................7
ARTICLE IV DISTRIBUTIONS ON THE SECURITIES .............................................................8
Section 4.01
Establishment of Accounts. .............................................................................8
Section 4.02
Certificate Factors and Series Factors............................................................10
Section 4.03
Distributions on the Securities. ......................................................................11
Section 4.04
Reconciliation Process. ..................................................................................13
Section 4.05
Appointment of Information Agent. ..............................................................13
Section 4.06
Annual Reports. .............................................................................................14
Section 4.07
Operational Guidelines. .................................................................................14
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS..............................14
Section 5.01
Representations and Warranties of the Sponsor. ..............................................14
Section 5.02
Representations and Warranties of the Trustee. ...............................................15
Section 5.03
Sponsor Breach; Repurchase Obligation; Substitution. ....................................15
ARTICLE VI CONCERNING THE TRUSTEE...........................................................................16
Section 6.01
Duties of Trustee............................................................................................16
Section 6.02
Certain Matters Affecting the Trustee. ..........................................................17
Section 6.03
Trustee Not Liable for Securities...................................................................18
Section 6.04
Trustee May Own Securities..........................................................................18
Section 6.05
Payment of Trustee’s Fees and Expenses. .....................................................18
Section 6.06
Eligibility Requirements for Trustee. ............................................................18
Section 6.07
Resignation and Removal of the Trustee. ......................................................19
Section 6.08
Successor Trustee...........................................................................................21
Section 6.09
Appointment of Co-Trustee. ..........................................................................21
Section 6.10
Merger or Consolidation of Trustee...............................................................21
Section 6.11
Indemnification of HUD and Ginnie Mae. ....................................................22
VI-13-2
Section 6.12
Section 6.13
Performance Reviews by Ginnie Mae. ..........................................................22
Voting of the Underlying Certificates or the Underlying SMBS Securities..22
ARTICLE VII TERMINATION ...................................................................................................22
ARTICLE VIII MISCELLANEOUS PROVISIONS....................................................................23
Section 8.01
Limitation of Rights of Holders.....................................................................23
Section 8.02
Control by Holders.........................................................................................23
Section 8.03
Amendment of Trust Agreements..................................................................23
Section 8.04
Persons Deemed Owners. ..............................................................................24
Section 8.05
Third-Party Beneficiary; Ginnie Mae Subrogation........................................24
Section 8.06
Preemption. ....................................................................................................24
Section 8.07
Governing Law. .............................................................................................24
Section 8.08
Successors. .....................................................................................................25
Section 8.09
Headings. .......................................................................................................25
Section 8.10
Notice and Demand........................................................................................25
Section 8.11
Severability of Provisions. .............................................................................26
Section 8.12
Counterparts...................................................................................................26
ARTICLE IX TAX ADMINISTRATOR ......................................................................................26
Section 9.01
Tax Administration. .......................................................................................26
Section 9.02
Resignation and Removal of the Tax Administrator. ....................................27
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STANDARD TRUST PROVISIONS
FOR GINNIE MAE SMBS TRUSTS
THESE STANDARD TRUST PROVISIONS FOR GINNIE MAE SMBS TRUSTS are to be
incorporated by reference in each Trust Agreement entered into by and between a Sponsor and a
Trustee in connection with each Series of Ginnie Mae’s Guaranteed Stripped Mortgage-Backed
Securities and shall apply to each such Series except as otherwise provided in the related Trust
Agreement.
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases shall have the meanings set forth in this
Article I. Capitalized terms used and not otherwise defined herein shall have the meanings set forth
in the related Trust Agreement.
Book-Entry Depository Account: An Eligible Account that is a limited purpose account maintained
by the Trustee at the Book-Entry Depository, which account shall, among other things, be credited
with all distributions in respect of the Trust Assets, and from which amounts distributable to
Securities shall be payable.
Class: As to any Series, all Securities sharing the same designation.
Distribution Shortfall Amount: As defined in Section 4.04(b).
Notional Balance: As to any Outstanding Security that constitutes an interest only security, (i) prior
to the initial Distribution Date, the notional denomination thereof; and (ii) subsequent to its initial
Distribution Date, the notional denomination thereof multiplied by the then current Series Factor.
Outstanding Security: Each Security; provided, however, that upon the exchange of any Security
pursuant to Section 3.04 hereof, the Security so exchanged shall be deemed no longer to be an
Outstanding Security and each Security issued in exchange therefor shall be deemed to be an
Outstanding Security.
Security: A Ginnie Mae Guaranteed Stripped Mortgage-Backed Security.
Security Principal Balance: As to any Outstanding Security (other than an Interest Only Security)
prior to the initial Distribution Date, the denomination thereof; and as to any such Outstanding
Security subsequent to such initial Distribution Date, the denomination thereof multiplied by the then
applicable Series Factor.
Tax Administrator: With respect to a Trust, the Person designated in the Trust Agreement to perform
certain tax administrative functions for the Trust.
Trust: As to each Series, the related Ginnie Mae SMBS Trust.
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Trust Agreement: With respect to each Trust, the agreement between the Sponsor and the Trustee
that identifies and establishes the Trust and the particular Securities issued in respect of that Trust.
Each Trust Agreement shall incorporate these Standard Trust Provisions by reference and may
modify, amend or supplement the terms hereof in any respect.
ARTICLE II
ESTABLISHMENT OF TRUST
Section 2.01 Establishment of Trust.
As of the Closing Date, the Sponsor will establish the Trust by depositing the Trust Assets identified
in the related Trust Agreement with the Trust, and the Trust will issue the Securities, representing the
entire beneficial ownership interest in the Trust, to the Sponsor in consideration for the Trust Assets.
Section 2.02 Conveyance of Trust Assets.
The deposit of Trust Assets by a Sponsor to a Trust pursuant to the related Trust Agreement shall
occur upon the Closing Date for such Series and shall constitute a sale, assignment, transfer and
conveyance by the Sponsor to the Trust of all right, title and interest in such Trust Assets as of the
first day of the month of the Closing Date, notwithstanding any provision of federal or state law to
the contrary.
Section 2.03 Registration of Trust Assets.
Each Trust Asset included in each Trust will be registered in the name of the Book-Entry Depository
or the applicable Trust Asset Depository, as the case may be, or the applicable Depository’s
nominee(s), for the benefit of the Trustee. The books and records of each Depository will reflect the
Trustee as registered holder of the related Trust Assets, and the books and records of the Trustee will
reflect that it holds the Trust Assets as Trustee of the related Trust for the benefit of the Holders of
the Securities of that Trust.
Section 2.04 Delivery of Securities.
Simultaneously with the execution and delivery of the Trust Agreement, the Trustee shall deliver to
the Sponsor the Securities in an amount equal to the aggregate principal balance of the underlying
Trust Assets.
Section 2.05 Board Approval of Trust Agreement.
Prior to the execution of the Trust Agreement and the establishment of the Trust, the Trustee’s board
of directors, its duly appointed loan committee, duly appointed trust committee or duly authorized
officers, as the case may be, shall approve the Trust Agreement in accordance with the Trustee’s
organizational documents and any applicable state or federal regulation, including, to the extent
applicable, and without limitation 12 C.F.R. §§ 9.7 and 550.5, each as amended from time to time,
and such approval shall be reflected in the minutes of the Trustee’s board or committee, as
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applicable. The Trustee shall maintain the Trust Agreement as an official record of the Trustee from
the time the Trust Agreement is executed.
Section 2.06 Separate Grantor Trusts.
The arrangement pursuant to which each Trust is created pursuant to the related Trust Agreement,
and pursuant to which the related Trust Assets will be administered, shall be treated as a grantor trust
under subpart E, part I of subchapter J of the Internal Revenue Code of 1986, as amended (the
“Code”). The provisions of the related Trust Agreement shall be interpreted in a matter consistent
with such treatment.
ARTICLE III
THE SECURITIES
Section 3.01 Forms and Denominations of Securities.
The Classes of Securities shall be maintained, transferred and exchanged as Securities on the bookentry records of the Book-Entry Depository in minimum denominations of $100,000 and integral
multiples of $1 in excess thereof, except that the minimum denomination will not be greater than the
then authorized Class Principal Balance or Class Notional Balance. No person acquiring a beneficial
ownership interest in the Securities (a “beneficial owner”) shall be entitled to receive a physical
certificate representing such ownership interest.
Section 3.02 Method of Distribution.
Distributions on the Securities shall be made by the Trustee on each Distribution Date to each Holder
as of the related Record Date. Subject to Section 8.04, distributions on the Securities shall be made
through the facilities of the Book-Entry Depository pursuant to instructions provided by the Trustee
and/or the Information Agent. In the event of a principal or interest payment error, the Trustee shall,
pursuant to Ginnie Mae’s instructions, effect corrections by the adjustment of payments to be made
on future Distribution Dates.
Section 3.03 Authorization, Issuance and Delivery of Securities.
The manual execution of the SMBS Trust Agreement by an authorized officer of each of the Trustee
and the Sponsor shall be conclusive evidence that the Securities have been duly and validly
authorized and validly issued by the Trustee and are entitled to the benefits of the SMBS Trust
Agreement.
Delivery of the Securities occurs when the Registrar registers the transferee as the registered owner
of such Securities. The Securities to be issued at closing shall be identified on an Issuance Statement
attached as Exhibit 1 to the Trust Agreement prepared by the Sponsor and delivered to the Trustee.
On the Closing Date, the Registrar shall register the Book-Entry Depository as the registered owner
of the Securities. Upon execution and delivery of the Guaranty Agreement with respect to each
Trust, Ginnie Mae authorizes the issuance of the Securities, each of which is entitled to the benefits
of the following Ginnie Mae Guaranty:
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THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION, PURSUANT TO SECTION
306(g) OF THE NATIONAL HOUSING ACT, GUARANTEES THE TIMELY PAYMENT OF
PRINCIPAL AND INTEREST ON THIS SECURITY IN ACCORDANCE WITH THE TERMS
AND CONDITIONS SET FORTH HEREIN AND IN THE RELATED TRUST AGREEMENT.
THE FULL FAITH AND CREDIT OF THE UNITED STATES OF AMERICA IS PLEDGED TO
THE PAYMENT OF ALL AMOUNTS THAT MAY BE REQUIRED TO BE PAID UNDER THIS
GUARANTY.
Section 3.04 Registration of Securities.
The Trustee shall keep one or more offices or agencies at which, subject to such reasonable
regulations as it may prescribe, the Trustee or another Person designated by the Trustee and approved
by Ginnie Mae shall be the registrar and shall maintain a register and provide for the registration of
Securities as herein provided.
Section 3.05 Exchange of Securities for Trust MBS
Securities shall be exchangeable on the books of the Book-Entry Depository for (i) other Securities
within the same Series or (ii) a pro rata percentage ownership interest in the underlying Trust Assets
to the extent that the Trust consists of a single Ginnie Mae Certificate, on and after the Closing Date
under the terms and conditions hereinafter set forth and otherwise in accordance with the procedures
specified in the related Offering Circular.
Holders of Securities of each Class of any Series may exchange any such Securities or a portion
thereof for a proportionate interest in one or more other Securities within the same Series, so long as
the aggregate interests of the Securities surrendered for exchange represent identical percentage
interests in the related Interest Distribution Amount and Principal Distribution Amount of the
Securities to be exchanged (except for de minimis differences due to rounding). The aggregate Class
Principal Balances of the Securities delivered in any such exchange shall equal the aggregate Class
Principal Balances of the Securities surrendered for exchange.
For any Series of Securities evidencing an interest in a single Ginnie Mae Certificate, holders of
Securities of each Class of the related Series may exchange any such Securities for a corresponding
portion of the Ginnie Mae Certificate, so long as the aggregate interests of the Securities surrendered
for exchange represent identical percentage interests in the principal and interest entitlements of the
Ginnie Mae Certificate to be exchanged (except for de minimis differences due to rounding). The
aggregate principal balances of the Ginnie Mae Certificates delivered in any such exchange shall
equal the aggregate outstanding Class Principal Balances of the Securities surrendered for exchange.
The Ginnie Mae Certificates surrendered in the exchange may be exchanged back into a
proportionate interest in one or more Classes of Securities in the same Series.
There shall be no limitation (other than with respect to minimum denomination requirements) on any
exchanges authorized pursuant to this Section 3.05, and, except as provided in the following
paragraph, no fee or other charge shall be payable in connection therewith.
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Unless otherwise specified in the related Offering Circular or Trust Agreement, as a condition to
each exchange, a fee shall be payable to the Trustee equal to 1/32 of 1% of the outstanding principal
balance (or notional balance, to the extent provided in the following proviso) of the Securities or the
Trust Assets to be submitted for exchange (but not less than $2,000 or greater than $25,000).
Unless otherwise specified in the related Offering Circular or Trust Agreement, any beneficial owner
proposing to effect an exchange as contemplated by this Section 3.05 shall notify the Trustee
(through the facilities of the Book-Entry Depository) no later than two Business Days before the
proposed date of exchange; provided however, that no such exchange can occur on the last business
day of any month. Any such notice as provided hereunder shall become irrevocable by the beneficial
owner on the second Business Day preceding the proposed date of exchange, provided that the
exchange fee has been paid. The contents of any notice of exchange shall be specified in the related
Offering Circular.
In connection with any exchange of Securities or Ginnie Mae Certificates, the Trustee shall verify
that such exchange has been effected in the appropriate proportions. The Trustee shall promptly
notify the Book-Entry Depository (or its participant, as applicable) in the event of error. The initial
distribution in respect of a Security delivered for exchange shall occur on the Distribution Date in the
month following the month of exchange.
ARTICLE IV
DISTRIBUTIONS ON THE SECURITIES
Section 4.01 Establishment of Accounts.
(a)
Book-Entry Depository Account. The Trustee shall maintain a Book-Entry
Depository Account with the Book-Entry Depository and, if any Underlying Certificates are held
through book-entry facilities other than the Book-Entry Depository, a Trust Asset Depository
Account at each applicable Trust Asset Depository. With respect to each Trust, the Trustee shall
account for all funds in, all deposits to and all withdrawals from the Book-Entry Depository
Account separately and on a Trust-by-Trust basis, clearly identifying the Segregated Portion
thereof. The Depository Accounts shall be credited with amounts as provided in Sections 4.03
and 4.04 hereof.
(b)
Trustee ABA Account. The Trustee shall maintain a Trustee ABA Account,
which account shall include subaccounts consisting of the Trustee Limited Purpose Account and
the Trustee Issuer’s Account. With respect to each Trust, the Trustee shall account for all funds
in, all deposits to and all withdrawals from the Trustee ABA Account separately and on a Trustby-Trust basis. The Trustee ABA Account shall be credited with amounts as provided in Section
4.03 hereof.
(c)
Variance Account. With respect to each Trust, the Trustee shall establish and
maintain a separate Variance Account, which will be an Eligible Account. Amounts will be
credited to the Variance Account and withdrawals will be made from the Variance Account as
specified herein. The Variance Account shall not be an asset of the Trust, the owner of which
solely for federal income tax purposes (and not for any other purpose) will be Ginnie Mae. The
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depository records of the Trustee, or, as the case may be, the depository institution or trust
company at which the Variance Account is to be established, shall reflect in respect of the
Variance Account (i) that the Trustee, as depositor, is acting in a fiduciary capacity on behalf of
the Holders of Securities in respect of the Trust, (ii) the names and respective interests of such
Holders, and (iii) that such Holders may be acting in a fiduciary capacity for others. If the
amounts on deposit in the Variance Account exceed $100, the Trustee shall invest amounts held
in the Variance Account in Eligible Investments approved by Ginnie Mae; any investment
earnings shall be for the account of and distributable to Ginnie Mae unless otherwise allocated to
make up for shortfalls as provided in Section 4.04(b) hereof.
(d)
Collection Account. The Trustee will maintain an Eligible Account (the
“Collection Account”) for the purposes provided in Section 4.03. With respect to each Trust, the
Trustee shall account for all funds in, all deposits to and all withdrawals from the Collection
Account separately and on a Trust-by-Trust basis clearly identifying the Segregated Portions
thereof. Amounts on deposit from time to time in the Collection Account may be invested in
Eligible Investments, provided that (i) such Eligible Investments consist solely of investments
described in clause (a) or (b) of the definition of Eligible Investments and (ii) such Eligible
Investments are held to their maturity, if any, and are not sold except to facilitate a distribution
from the Collection Account. Any investment earnings on the Collection Account shall be
retained by, and be for the account of, the Trustee as part of the Trustee Fee. Regardless whether
the amounts deposited in the Collection Account are invested, to the extent amounts required to
be deposited into the Trustee ABA Account pursuant to Section 4.03 are so deposited on each
Ginnie Mae Certificate Payment Date, the Trustee shall pay to Ginnie Mae from its own funds
the Ginnie Mae Interest Amount as of each Distribution Date. The depository records of the
Trustee, or, as the case may be, the depository institution or trust company at which the
Collection Account is to be established, shall reflect in respect of the Collection Account (i) that
the Trustee, as depositor, is acting in a fiduciary capacity on behalf of the Holders of Securities
in respect of the Trust and Ginnie Mae, (ii) the names and respective interests of such Holders
and Ginnie Mae, and (iii) that such Holders may be acting in a fiduciary capacity for others.
(e)
Board Approval. Prior to the establishment of any Trust Account, the Trustee’s
board of directors, or a duly appointed loan committee, duly appointed trust committee or duly
authorized officers, as the case may be, of the Trustee, or, as the case may be, the Trustee’s
board of directors, a duly appointed loan committee, duly appointed trust committee or duly
authorized officers of the depository institution or trust company at which such Trust Account is
to be established, shall approve the establishment of such Trust Account and the Trust
Agreement in accordance with the organizational documents of such institution and any
applicable state or federal regulation, including, to the extent applicable, and without limitation
12 C.F.R. §§ 9.7 and 550.5, each as amended from time to time, and such approval shall be
reflected in the minutes of such board or committee, as applicable. The Trustee, or, as the case
may be, the depository institution or trust company at which any Trust Account is to be
established, shall maintain the Trust Agreement as an official record from the time of its
execution.
(f)
Segregated Portions. With respect to each Trust, the Book-Entry Depository
Account shall include, and where applicable a reference to such account herein or in the related
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Trust Agreement shall be understood to be a reference to, a Segregated Portion of such account
corresponding to such Trust.
Section 4.02 Certificate Factors and Series Factors.
(a)
Certificate Factors for Trust Assets. The Trustee shall use its reasonable best
efforts to obtain the Certificate Factors for Trust MBS (and the Underlying Certificate Factors
for Underlying Certificates and Underlying SMBS Securities) on or before 11:00 a.m. Eastern
time on the second Business Day preceding a Distribution Date (or, in the case of Ginnie Mae II
Certificates, the third preceding Business Day), or such other date set forth in the related Trust
Agreement. In the event any Certificate Factors for Ginnie Mae Platinum Certificates are not
published or otherwise available as specified in the preceding sentence, the Trustee shall
immediately notify the Information Agent and Ginnie Mae and follow the procedures set forth in
Section 4.02(c).
(b)
Calculated Certificate Factors for Trust Assets. With respect to any Trust MBS
(other than Ginnie Mae Platinum Certificates) for which a Certificate Factor is not available by
1:00 p.m. Eastern time on the Certificate Factor Date, the Trustee shall determine the Calculated
Certificate Factor for such Trust MBS.
(c)
Unavailability of Certificate Factors or Underlying Certificate Factors. In the
event that the Underlying Certificate Factor for any Underlying Certificate or any Underlying
SMBS Security (or Certificate Factor for any Ginnie Mae Platinum Certificate) has not been
made available to the Trustee by 11:00 a.m. Eastern time on the second Business Day preceding
a Distribution Date (or in the case of Ginnie Mae Platinum Certificates backed by Ginnie Mae II
MBS Certificates, the third preceding Business Day), the Trustee shall assume for purposes
hereof that such factors have not changed from the preceding Underlying Certificate Payment
Date or Underlying SMBS Security Payment Date (or Certificate Factor Date). As a result, the
Principal Distribution Amount in respect of any Underlying Certificate or any Underlying SMBS
Security (or Trust Asset constituting a Ginnie Mae Platinum Certificate) described in the
preceding sentence shall be calculated on the basis of such assumed (i.e., unchanged) factors,
with the effect that no amounts in respect of principal attributable to such Underlying Certificate
or Underlying SMBS Security (or Ginnie Mae Platinum Certificate) shall be distributable on the
related Securities on the related Distribution Date.
Based on, as appropriate, Certificate Factors and Calculated Certificate Factors, if any, determined in
accordance with Sections 4.02(a) and 4.02(b) above, the Trustee shall calculate the Series Factor, the
Principal Distribution Amount and the Interest Distribution Amount for the Distribution Date. In
addition, based on the provisions of the trust Agreement, the Trustee shall calculate the Interest Rate
for each Class and the amount of principal and interest to be distributed to each Class on that
Distribution Date. The Trustee shall report the Interest Rate and the Series Factor for each Class and
any Calculated Certificate Factors (and other information as requested by Ginnie Mae from time to
time) to the Information Agent no later than 6:00 p.m. Eastern time on the second Business Day
preceding the Distribution Date (or the third preceding Business Day, in the case of Securities
evidencing an interest in Trust Assets that are backed by Ginnie Mae II Certificates).
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Payments on the Trust Assets; Ginnie Mae Guaranties and Ginnie Mae Guaranty Fee; Trustee Fee.
(d)
Application of Payments. On each Ginnie Mae Certificate Payment Date and
Underlying Certificate Payment Date or Underlying SMBS Security Payment Date, as
applicable, (i) the Book-Entry Depository shall be entitled to all payments in respect of Trust
Assets held through the facilities of the Book-Entry Depository and shall credit the Trustee ABA
Account with all such amounts; and (ii) each Trust Asset Depository shall be entitled to all
payments in respect of the remaining Trust Assets held through the facilities of such Trust Asset
Depository and shall credit the related Trust Asset Depository Account with all such amounts. In
each case, such amounts shall be held by the applicable depository in trust for the exclusive
benefit of the Trustee as the holder of the Trust Assets. All amounts received in respect of the
Trust Assets and credited to the Trustee ABA Account and the Trust Asset Depository Account,
if applicable, shall be withdrawn therefrom by the close of business on the date of receipt in such
account and deposited into the Collection Account for retention until the next Distribution Date
for the related Securities; provided, however, if the Ginnie Mae Certificate Payment Date,
Underlying Certificate Payment Date or Underlying SMBS Security Payment Date coincides
with the Distribution Date for the related Securities (i.e. such amounts will be received and
distributed on the same day), then such amounts shall be immediately deposited into the
Collection Account from the Trustee ABA Account and the Trust Asset Depository Account, if
applicable, upon the receipt of such funds by the Trustee ABA Account and the Trust Asset
Depository Account, if applicable, and the Trustee shall immediately wire transfer such amounts
to the Book-Entry Depository Account for distribution pursuant to Sections 4.04(c) and (d)
hereof. Except as otherwise provided in the proviso to the immediately preceding sentence, by
no later than 9:00 a.m. Eastern time (or such other time that may be approved by Ginnie Mae) on
such next Distribution Date for the related Securities, all amounts on deposit in the Collection
Account that are identified as distributable as principal and interest, in respect of Book-Entry
Securities in respect of such Distribution Date shall be withdrawn therefrom and deposited into
the Book-Entry Depository Account for distribution pursuant to Section 4.04(c) and (d). All
remaining amounts on deposit in the Collection Account distributable as Trustee Fee amounts
and investment earnings, shall be withdrawn therefrom for application pursuant to Section
4.04(g) and Section 4.04(j) hereof. In addition, no later than 10:00 a.m. Eastern time on such
Distribution Date, amounts on deposit in the Collection Account in excess of the amounts set
forth in the preceding sentence (“Collection Excess Amounts”) shall be withdrawn therefrom and
shall be deposited in the Variance Account.
Section 4.03 Distributions on the Securities.
(a)
Distribution Date Statement. No later than 2:00 p.m. Eastern time on the first
Business Day following each Distribution Date, the Trustee shall provide to the Information
Agent a Distribution Date Statement in such form as is approved by the Trustee and Ginnie Mae.
Each Distribution Date Statement will specify (i) the Trustee Fee paid to the Trustee and the
amounts of investment earnings or amounts held in the Collection Account, (ii) amounts
distributed on such Distribution Date as principal and interest on the Book-Entry Securities from
amounts on deposit in the Book-Entry Depository Account and (iii) the Ginnie Mae Interest
Amount for the Distribution Date from the immediately preceding calendar month.
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(b)
Distribution Shortfall. No later than 10:00 a.m. Eastern Standard Time on the
Distribution Date, the Book-Entry Depository shall determine the amount, if any, by which (A)
the amounts distributable as principal and interest on the Securities on such Distribution Date,
exceed (B) the amounts on deposit in the Book-Entry Depository Account (the “Distribution
Shortfall Amount”). The Book-Entry Depository immediately shall notify Ginnie Mae of the
amount of such deficiency, and the account or accounts to which Ginnie Mae should transfer
such amounts. In the event that there are sufficient amounts in the Variance Account to cover
the Distribution Shortfall Amount, the Trustee shall withdraw the Distribution Shortfall Amount
from the Variance Account and wire transfer such amount to the Book-Entry Depository
Account no later than 10:01 a.m., and shall immediately inform Ginnie Mae of any such transfer.
(c)
Book-Entry Securities. The Trustee hereby directs the Book-Entry Depository to
withdraw from the Book-Entry Depository Account on each Distribution Date all amounts held
in such account, to the extent distributable as principal and interest and related Prepayment
Penalties, if any, on the Book-Entry Securities on that Distribution Date. On each Distribution
Date, the Book-Entry Depository will credit the accounts of its record owners of such BookEntry Securities in accordance with the standard procedures of the Book-Entry Depository.
(d)
Distributions. On each Distribution Date, the Trustee (and/or the Book-Entry
Depository on behalf of and pursuant to the instructions of the Trustee) shall make such
distributions on the Securities issued in respect of any Trust as shall be provided in the related
Trust Agreement. The Trustee hereby directs the Book-Entry Depository to withdraw from the
Book-Entry Depository Account on each Distribution Date amounts distributable as principal
and interest on the Securities as instructed by the Trustee. Any distributions or accruals of
interest made on a Distribution Date on the Securities issued in respect of a particular Trust shall
be at the Interest Rate set forth in or as otherwise described in the related Trust Agreement and in
respect of the related Accrual Period.
(e)
Allocations of Distributions. The Holders of any Class entitled to receive
distributions on any Distribution Date shall receive such distributions on a pro rata basis among
the Outstanding Securities of such Class based on the principal balance, notional balance or
percentage interest of such Securities. All distributions of principal on the Securities issued in
respect of a particular Trust shall be made as provided in the related Trust Agreement.
(f)
Interest Accrual. Unless otherwise provided in the related Trust Agreement, the
amount of interest accrued on each Class during an Accrual Period and to be distributed thereon
(or, to the extent applicable in the case of an Accrual Security, added to the principal amount
thereof) on the related Distribution Date shall be 1/12th of the applicable Interest Rate multiplied
by the Class Principal Balance (or Class Notional Balance) of such Class prior to the distribution
of principal (or, in the case of an Accrual Security, the addition of accrued interest to principal)
on such Distribution Date. Interest on the Securities will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
(g)
Ginnie Mae Interest Amounts. The Trustee shall distribute to Ginnie Mae the
Ginnie Mae Interest Amount with respect to that Distribution Date as soon as practicable but no
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later than the first Business Day of the next succeeding calendar month following such
Distribution Date, as instructed by Ginnie Mae.
(h)
Ginnie Mae Guaranty. With respect to each Series, pursuant to the Guaranty
Agreement, Ginnie Mae, in exchange for the Ginnie Mae Guaranty Fee, has guaranteed to each
Holder of a Security the timely payment of principal and interest on such Security in accordance
with the terms of the applicable Trust Agreement.
(i)
Ginnie Mae Guaranty Payments. If the Book-Entry Depository and/or the Trustee
discovers that payments on the Trust Assets underlying a Series together with any available
funds (including any such funds in the Variance Account) will be inadequate to distribute
principal and interest to the Securities of such Series on any Distribution Date in accordance with
the terms of the Trust Agreement, the Book-Entry Depository and/or the Trustee, as the case may
be, promptly shall inform Ginnie Mae that a Ginnie Mae Guaranty Payment must be made. In
that event, Ginnie Mae (or its agent) will transfer the amount of the shortfall to the Book-Entry
Depository Account or the Collection Account, as applicable, in immediately available funds in
accordance with Section 4.04(b) hereof. At Ginnie Mae’s option, Ginnie Mae may instruct the
Person designated by the Trustee and acceptable to Ginnie Mae as the Person to hold funds on
behalf of the Trustee (which Person initially shall be JPMorgan Chase Bank) to transfer such
amount. In addition, if on the Final Distribution Date of any Class, the funds available to be
distributed on such Class are insufficient to reduce the Class Principal Balance of such Class to
zero, Ginnie Mae shall make a Ginnie Mae Guaranty Payment in the amount of such
insufficiency. In the event that Ginnie Mae makes any Ginnie Mae Guaranty Payment to reduce
the Class Principal Balance of any Class to zero on its Final Distribution Date, such Class shall
continue to be treated as outstanding for all purposes, and Ginnie Mae shall be deemed to have
purchased the related Class and will be entitled to all subsequent distributions on such Class. To
the extent that Ginnie Mae fails to make any required payment pursuant to the Ginnie Mae
Guaranty, the related Trustee on behalf of the Holders shall be obligated to take all necessary and
appropriate actions to enforce the Ginnie Mae Guaranty in accordance with the terms hereof.
(j)
Trustee Fee. On the Business Day following each Distribution Date, the Trustee
shall withdraw for its own account from the Collection Account, the Trustee Fee and any
investment earnings payable with respect to such Distribution Date.
(k)
Separate Application of Payments. The application of payments pursuant to
Section 4.03 and this Section 4.04 shall be made separately in respect of each Trust, and each
reference to a Trust Account shall be understood to refer to the Segregated Portion of such
account corresponding to each Trust created hereunder.
Section 4.04 Reconciliation Process.
After a Distribution Date, at the request of Ginnie Mae, the Trustee shall reconcile payments in
accordance with the Ginnie Mae Multiclass Operational Guidelines. Such reconciliation may
involve credits and charges to one or more Trust Accounts.
Section 4.05 Appointment of Information Agent.
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Except as otherwise provided in the Trust Agreement, at the direction of Ginnie Mae, the Trustee of
each Trust has appointed The Bank of New York to be the Information Agent. Ginnie Mae has
reserved the right to substitute at any time another Person as the Information Agent.
Section 4.06 Annual Reports.
Within a reasonable period of time after the end of each calendar year (but in no event later than sixty
days after the end of such calendar year), the Trustee shall furnish or cause to be furnished to Ginnie
Mae and to each Person who at any time during the calendar year was the Holder of a Security a
statement containing the amount of distributions allocable to principal and the amount allocable to
interest. Such obligation of the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Tax Matters Person pursuant to any
requirements of the Code and Treasury Regulations.
Section 4.07 Operational Guidelines.
Ginnie Mae has established operational guidelines designed to assist the operational departments of
the Trustee, the Book-Entry Depository, the Information Agent and Ginnie Mae in complying with
the requirements of this Article IV. Ginnie Mae has reserved the right, consistent with law, to alter or
waive any of the requirements of the operational guidelines or to institute other requirements as it
deems appropriate. The Trustee hereby agrees to comply with the Ginnie Mae Multiclass
Operational Guidelines, as amended from time to time.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01 Representations and Warranties of the Sponsor.
The Sponsor hereby represents and warrants as follows:
(a)
The Trust Agreement constitutes the legal, valid and binding agreement of the
Sponsor, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and to
general principles of equity regardless whether enforcement is sought in a proceeding in equity
or at law;
(b)
Neither the execution and delivery by the Sponsor of the Trust Agreement, nor the
consummation by the Sponsor of the transactions therein contemplated, nor compliance by the
Sponsor with the provisions thereof, will (i) conflict with or result in a breach of, or constitute a
default under, any of the provisions of the articles of incorporation or by-laws of the Sponsor or
any law, governmental rule or regulation or any judgment, decree or order binding on the
Sponsor or any of its properties, or any of the provisions of any indenture, mortgage, deed of
trust, contract or other instrument to which the Sponsor is a party or by which it is bound, or (ii)
result in the creation of any lien, charge, or encumbrance upon any of its properties pursuant to
the terms of any such indenture, mortgage, deed of trust, contract or other instrument;
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(c)
The information set forth in the Final Data Statement for such Series with respect
to each Trust Asset is true and correct in all material respects as of the Closing Date;
(d)
The representations and warranties made by the Sponsor in the Sponsor
Agreement are true and correct in all material respects at and as of the Closing Date with the
same effect as if made on the Closing Date; and
(e)
The Sponsor has complied with all the agreements (including, without limitation,
the covenants in the Sponsor Agreement) and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date.
(f)
It is understood and agreed that the representations and warranties set forth in this
Section 5.01 shall survive delivery of the Trust Assets to the Trustee and shall inure to the
benefit of the Trustee and Ginnie Mae notwithstanding any restrictive or qualified endorsement
or assignment. Upon the discovery by the Sponsor or the Trustee of a breach of the foregoing
representations and warranties, the party discovering such breach shall give prompt written
notice to the other party to the Trust Agreement and to Ginnie Mae, and in no event later than
two Business Days from the date of such discovery.
Section 5.02 Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants as follows:
(a)
The Trustee acknowledges and declares that it holds and will hold the Trust
Assets identified in the Final Data Statement, and that it has agreed to hold all documents
delivered to it with respect to such Trust Assets and all assets of the Trust in trust for the
exclusive use and benefit of all present and future Holders and, to the extent provided herein,
Ginnie Mae.
(b)
The Trustee (i) acquired the Trust Assets on behalf of the Trust from the Sponsor
in good faith, for value, and without notice or knowledge of any adverse claim, lien, charge,
encumbrance or security interest (including, without limitation, any federal tax liens or liens
arising under ERISA), (ii) except as permitted in the Trust Agreement, has not and will not, in
any capacity, assert any claim or interest in the Trust Assets and will hold (or its agent will hold)
such Trust Assets and the proceeds thereof in trust pursuant to the terms of the Trust Agreement,
and (iii) has not encumbered or transferred its right, title or interest in the Trust Assets.
(c)
On the Closing Date, the Trustee shall deliver to the Sponsor and Ginnie Mae a
certificate certifying that the Trustee (or an agent thereof) is in possession of the Trust Assets for
such Series.
Section 5.03 Sponsor Breach; Repurchase Obligation; Substitution.
Within 90 days of the earlier of Sponsor’s discovery or notice to the Sponsor of any breach by the
Sponsor of any of its representations, warranties or covenants under a Sponsor Agreement or the
related Trust Agreement which breach, in the judgment of the Trustee or Ginnie Mae, materially and
adversely affects the value of any Trust Asset or the interest of the Trust therein, the Sponsor shall (i)
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cure such breach or (ii) in the case of Trust MBS, remove such affected Trust MBS from the Trust
and substitute one or more Ginnie Mae Certificates (A) with a Certificate Rate equal to the
Certificate Rate of the replaced Trust MBS as reflected in the records of the Trust and (B) with an
aggregate outstanding principal balance equal to the outstanding principal balance of the replaced
Trust MBS, as reflected in the records of the Trust, (C) with a Maturity Date no later than the
Maturity Date of the replaced Trust MBS and no earlier than six months prior to the Maturity Date of
the replaced Trust MBS, (D) that are entitled to payments on the following Ginnie Mae Certificate
Payment Date (which shall be the same Ginnie Mae Certificate Payment Date on which the replaced
Trust MBS was payable) and (E) that otherwise conform to the requirements of the Trust Agreement.
The Sponsor shall effect any substitution of a Trust MBS by depositing with the Trust each Ginnie
Mae Certificate to be substituted. However, no substitution for a Trust MBS may be made 90 days
or more after the Closing Date unless such representations, warranties or covenants relate specifically
to the characteristics of such Trust MBS, and in no event shall a substitution for a Trust MBS be
made more than two years after the Closing Date.
ARTICLE VI
CONCERNING THE TRUSTEE
Section 6.01 Duties of Trustee.
(a)
The Trustee undertakes to perform such duties and only such duties as are
specifically set forth in the related Trust Agreement. The Trustee, upon receipt of any and all
resolutions, certificates, statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee that are specifically required to be furnished pursuant to any provision of
such Trust Agreement, or that may be furnished to the Trustee at its request, shall examine them
to determine whether they conform to the requirements of such Trust Agreement.
(b)
No provision of any Trust Agreement shall be construed to relieve the Trustee of
such Trust from liability for its own negligent action, its own negligent failure to act or its own
misconduct; provided, however, that:
(c)
The duties and obligations of the Trustee shall be determined solely by the
express provisions of the related Trust Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in the related Trust
Agreement, and no implied covenants or obligations shall be read into the related Trust
Agreement against the Trustee;
(d)
The Trustee shall not be personally liable for an error of judgment made in good
faith by a responsible officer or responsible officers of the Trustee, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts;
(e)
The Trustee shall not be personally liable with respect to any action taken or
suffered or omitted to be taken by it in good faith in accordance with the direction of Ginnie Mae
as to the time, method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under a Trust Agreement.
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(f)
The Trustee with respect to any Trust shall not be personally liable with respect to
any action taken or suffered or omitted to be taken by it in good faith as to the enforcement by
the Trustee of the Ginnie Mae Guaranty.
(g)
The Information Agent shall not be deemed to be the agent of the Trustee, but
rather the agent of Ginnie Mae. The Trustee shall not be liable for any loss, liability or damage
to any Trust attributable to the acts or omissions of the Information Agent.
Section 6.02 Certain Matters Affecting the Trustee.
(a)
Except as otherwise provided in Section 6.01, with respect to any Series:
(i)
The Trustee may request (at its sole expense, except as otherwise provided
herein) and rely conclusively upon and shall be protected in acting or refraining
from acting upon any resolution, officers’ certificate, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper, communication or document prima facie in
proper form and believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(ii)
The Trustee may consult with counsel, and any opinion of counsel shall be
full and complete authorization and protection from liability in respect of any
action taken or suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel;
(iii) The Trustee shall be under no obligation to exercise any of the trusts or
powers vested in it by the related Trust Agreement or to institute, conduct or
defend any litigation thereunder or in relation thereto at the request, order or
direction of Ginnie Mae or any of the Holders of such Series, pursuant to the
provisions of the Trust Agreement, unless (i) such directing party has offered to
the Trustee reasonable security or indemnity against the costs, expenses
(including the fees and disbursements of Trustee’s counsel), and liabilities that
may be incurred by the Trustee with respect thereto or (ii) the need for or
desirability of such institution, conduct or defense results from the negligence of
the Trustee;
(iv)
The Trustee shall not be personally liable for any action taken or suffered
or omitted to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by a Trust Agreement;
(v)
The Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper, communications or
document, unless requested in writing so to do by Ginnie Mae or the Holders of a
Series evidencing Percentage Interests aggregating not less than 50% of each
Class of Securities in such Series; provided, however, that the reasonable expense
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of such investigation shall be paid by the party requesting the investigation, and
the Trustee may require reasonable indemnity against the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation as a
condition to proceeding;
(vi)
The Trustee may execute any of the trusts or powers under any Trust
Agreement or perform any duties thereunder either directly or by or through
agents or attorneys;
(vii) The Trustee may rely conclusively on all calculations and other
information provided to it by Ginnie Mae, the Information Agent or any other
agent of Ginnie Mae; and
(viii) The Trustee shall not be obligated to post a bond or other form of surety in
connection with its service or status as Trustee under a Trust Agreement.
Section 6.03 Trustee Not Liable for Securities.
(a)
The Trustee makes no representations as to the validity or sufficiency of any Trust
Agreement or of any Securities (except that each Trust Agreement has been duly executed and is
binding on the Trustee and the Securities of each Series shall be duly and validly issued,
authorized and delivered by the Trustee) or of any Trust Asset or any document related to any of
the foregoing.
(b)
The Trustee shall have no responsibility or accountability with respect to the
sufficiency or adequacy of the following: (a) the Trust Asset and Ginnie Mae Guaranty to
generate funds necessary to make required payments on the Securities or (b) any offering circular
or other securities filings or reports required to be filed by any federal, state or local securities
regulatory authority, including but not limited to the Securities and Exchange Commission.
Section 6.04 Trustee May Own Securities.
(a)
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities, and may transact banking or trust business with Ginnie Mae, any Sponsor,
the Book-Entry Depository, any Trust Asset Depository, any beneficial owner or any other
Trustee with the same rights it would have if it were not Trustee.
Section 6.05 Payment of Trustee’s Fees and Expenses.
(a)
With respect to the Distribution Date in each month, the Trustee shall be paid
compensation for all services rendered by it in the execution of the trusts created by the Trust
Agreement and in the exercise and performance of any of its powers and duties under the Trust
Agreement (which compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) in an amount equal to the Trustee Fee.
Section 6.06 Eligibility Requirements for Trustee.
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(a)
The Trustee under any Trust Agreement must have been approved in writing by
Ginnie Mae to serve as Trustee under such Trust Agreement and at all times (a) must be
organized and doing business under the laws of the state of its incorporation or the United States
of America, (b) must be authorized under such laws to exercise corporate trust powers, (c) must
have (or must be a member of a consolidated bank or financial holding company that has) a
combined capital and surplus that meets the requirements prescribed by Ginnie Mae from time to
time pursuant to written notice provided to the Trustee by Ginnie Mae, (d) must be a member
depository institution of the FRS, (e) must be an entity subject to supervision or examination by
federal or state authority and (f) unless otherwise approved by Ginnie Mae, must have a long
term unsecured debt obligation rating from Moody’s Investors, Inc. of at least Aa3 and a short
term debt or commercial paper rating from Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc. of at least A-1. In addition, neither the Trustee nor any officer or
professional working on the subject matter of the Trust may be currently suspended or debarred
by any governmental agency, nor may such Persons have been convicted of, or found liable in a
civil action for, fraud, forgery, bribery, falsification or destruction of records, making false
statements or any other offense indicating a lack of business integrity that seriously and directly
could affect the responsibility of the Trustee, or such officer or professional.
(b)
If the Trustee publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then for the purposes of
this Section the combined capital and surplus of the Trustee shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so published. If at any time
the Trustee ceases to be eligible in accordance with the provisions of this Section, the Trustee
shall notify Ginnie Mae in writing immediately and, if Ginnie Mae requests, shall resign
immediately in the manner and with the effect specified in Section 6.07 hereof.
Section 6.07 Resignation and Removal of the Trustee.
(a)
The Trustee may resign as Trustee of any Trust at any time and be discharged
from the trusts created under the related Trust Agreement by giving written notice thereof to
Ginnie Mae and upon appointment of a successor trustee pursuant to Section 6.08. Upon
receiving such notice of resignation, Ginnie Mae may appoint a successor trustee. If no
successor trustee shall have been so appointed and have accepted appointment within 90 days
after the giving of such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee acceptable to Ginnie Mae.
(b)
Ginnie Mae may remove the Trustee for cause at any time. For the purposes of
this Section “cause” shall mean one of the following:
(i)
The Trustee’s ceasing to be eligible in accordance with the provisions of
Section 6.06 hereof and failing to resign after written request therefor by
Ginnie Mae or its agent;
(ii)
The Trustee’s inability or failure to take any actions required under a Trust
Agreement;
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(iii)
The Trustee’s failure to observe or perform any of its covenants set forth
in the related Trust Agreement;
(iv)
A court or regulatory authority having jurisdiction in the premises,
including without limitation the FDIC and any similar state authority,
entering a decree or order for relief in respect of the Trustee in an
involuntary case under any bankruptcy, insolvency, receivership,
conservatorship or other similar law or regulation, state or federal, now or
hereafter in effect, or appointing a receiver, conservator, assignee, trustee,
custodian, sequestrator or other similar official for the Trustee or for all or
any substantial part of its property, or order the winding up or liquidation
of its affairs;
(v)
The Trustee’s commencing a voluntary case under any applicable
bankruptcy, insolvency, receivership, conservatorship or other similar law
or regulation, state or federal, now or hereafter in effect, or consenting to
or acquiescing in the entry of an order for relief in an involuntary case
under any such law, or consenting to or acquiescing in the appointment of
or taking of possession by a receiver, conservator, liquidator, assignee,
trustee, custodian, sequestrator or other similar official for the Trustee or
for all or any substantial part of its property, or making a general
assignment for the benefit of creditors, or the Trustee’s generally failing to
pay its debts as they become due;
(vi)
The discovery that any Location-Based Tax, other tax or other charge
levied or threatened to be levied against a Trust on account of the situs of
the Trustee could be avoided by the appointment of a successor trustee, to
the extent that Ginnie Mae determines that such tax or other change may
not be adequately covered by the Trustee; or
(vii)
The removal for cause of the Trustee as the trustee of any trust that has
issued securities guaranteed by Ginnie Mae.
(viii) Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor trustee as
provided in Section 6.08 hereof but in no event shall become effective
until a successor has been appointed and has accepted the duties of the
Trustee. Any liability of the Trustee under a Trust Agreement arising
prior to such termination shall survive such termination.
(ix)
To the extent that a successor trustee is entitled to receive reasonable
compensation in excess of compensation payable to the Trustee under the
related Trust Agreement, the Trustee shall indemnify Ginnie Mae and the
Trust for the amount of such excess and shall provide such security for
such indemnity as Ginnie Mae may require.
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Section 6.08 Successor Trustee.
(a)
Any successor trustee appointed to serve as Trustee of a Trust shall execute,
acknowledge and deliver to Ginnie Mae and its predecessor trustee an instrument accepting such
appointment under the related Trust Agreement, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers, duties and obligations
of its predecessor under the Trust Agreement, with the same effect as if originally named as
trustee therein. The predecessor trustee shall immediately deliver to the successor trustee all
documents and statements held by it under the applicable Trust Agreement, and the predecessor
trustee shall execute and deliver such instruments and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations. The predecessor trustee shall perform the duties and
obligations imposed on it in this Section irrespective of any stay arising from, any injunction or
other process issued pursuant to, and any restriction or limitation imposed by any bankruptcy,
insolvency, receivership, conservatorship or other similar law or regulation, state or federal, now
or hereafter in effect, including without limitation 11 U.S.C. §§ 105, 362 and 18 U.S.C. §§ 1821,
1823, each as amended from time to time. In the event the predecessor trustee fails to perform
the duties and obligations imposed on it in this Section, Ginnie Mae may take any action it
deems necessary or advisable to cause the performance of such duties and obligations.
(b)
No successor trustee shall accept appointment as provided in this Section unless at
the time of such acceptance such successor trustee is eligible under the provisions of Section
6.06 hereof.
(c)
Upon acceptance of appointment by a successor trustee as provided in this
Section, the successor trustee shall mail notice of the succession of such trustee hereunder to all
Holders at their addresses as shown in the register.
Section 6.09 Appointment of Co-Trustee.
(a)
The Trustee shall be permitted to appoint a Person that either meets the eligibility
requirements to act as a Trustee hereunder or otherwise has been approved in writing by Ginnie
Mae to act as co-trustee with respect to the Trust. Any such co-trustee may perform any of the
duties and obligations of the Trustee hereunder, provided, however, that any such appointment of
any co-trustee shall not relieve the Trustee of any of its obligations and duties hereunder. The
Trustee shall continue to remain liable for the performance of all such duties and obligations
hereunder (including the obligation to indemnify Ginnie Mae pursuant to Section 6.11 hereof),
irrespective of the appointment of any co-trustee to perform such duties or obligations on behalf
of the Trustee.
Section 6.10 Merger or Consolidation of Trustee.
(b)
Any corporation into which a Trustee may be merged or converted or with which
it may be consolidated or any corporation resulting from any merger, conversion or consolidation
to which such Trustee may be a party, or any corporation succeeding to all or substantially all of
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the corporate trust business of such Trustee, shall be the successor of such Trustee under the
related Trust Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to the Trust Agreement, provided such corporation is eligible under the
provisions of Section 6.06 hereof.
Section 6.11 Indemnification of HUD and Ginnie Mae.
The Trustee for each Trust shall indemnify and hold harmless HUD and Ginnie Mae (including each
official, officer, employee and agent of HUD and Ginnie Mae) from and against any and all losses,
claims, demands, liabilities, or expenses (including, without limitation, all attorneys’ fees and related
charges and expenses) resulting, directly or indirectly, from any Trustee default or other failure to
perform under the related Trust Agreement. Without limiting the foregoing, Ginnie Mae’s right to
indemnification hereunder shall include the right to reimbursement of any and all amounts paid by
Ginnie Mae to any Holder of such Series as a result of any failure of the Trustee properly to calculate
the amount of any required distribution to any such Holder or to cause the proper distributions to be
made to any such Holder, together with interest thereon at a rate equal to the yield on three-month
U.S. Treasury securities.
Section 6.12 Performance Reviews by Ginnie Mae.
At its sole discretion, and from time to time, Ginnie Mae shall have the right to undertake a full
performance review of the Trustee and any subcontractors retained by the Trustee. Any such review
may involve the on site inspection of the Trustee’s (or any subcontractor’s) facilities and the review
of any books, records or documents of the Trustee (or any subcontractor) which relate to the
performance by the Trustee (or any subcontractor) of its duties hereunder. In connection with any
such review and inspection, the Trustee agrees to make available to Ginnie Mae appropriate officers
of the Trustee (or any subcontractor) and to otherwise cooperate with such an undertaking by Ginnie
Mae.
Section 6.13 Voting of the Underlying Certificates or the Underlying SMBS Securities.
In the event that a vote of the holders of Underlying Certificates or Underlying SMBS Securities is
required pursuant to the trust agreement governing any Underlying Trust or Underlying SMBS Trust,
the Trustee shall vote in respect of the Underlying Certificate or Underlying SMBS Trust in a manner
that, in its sole judgment, is consistent with the best interests of the holders of the Securities.
Notwithstanding the preceding sentence, the Trustee shall not have a right to vote, under this Section
6.13, in any case where the exercise of such right would constitute a variation of the investment of
the Holders for purposes of United States Treasury Regulation section 301.7701-4(c), and shall
instead abstain from voting in such instance.
ARTICLE VII
TERMINATION
The respective obligations and responsibilities of the Sponsor and the Trustee created by the Trust
Agreement shall terminate upon the payment of all principal and accrued interest on the Securities
and all other amounts due and owing by the Trustee under such Trust Agreement; provided,
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however, that in no event shall the Trust created hereby continue beyond the expiration of 21 years
less one day from the death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James’s, living on the date hereof.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.01 Limitation of Rights of Holders.
The death or incapacity of any person having an interest, beneficial or otherwise, in a Security shall
not operate to terminate any Trust Agreement, nor entitle the legal representatives or heirs of such
person or any Holder for such person to claim an accounting, take any action or bring any proceeding
in any court for a partition or winding up of any Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Section 8.02 Control by Holders.
Except as otherwise provided in the Trust Agreement, no Holder in any Series shall have any right to
vote or in any manner otherwise control the administration, operation and management of any Trust,
or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of
the Securities, be construed so as to constitute the Holders from time to time as partners or members
of an association; nor shall a Holder be under any liability to any third person by reason of any action
taken by the parties to this Trust Agreement pursuant to any provision hereof.
Section 8.03 Amendment of Trust Agreements.
(a)
Any Trust Agreement may, with the consent of Ginnie Mae, and shall, at the
request of Ginnie Mae, be amended from time to time by the Trustee without the consent of the
Sponsor or any Holder or Holders (i) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision herein, or to make any other
provisions with respect to this Trust Agreement, provided that any such amendment shall not
effect a change in interest rates, the Distribution Dates, Record Dates, Accounting Dates, the
Ginnie Mae Guaranty or other payment terms established by the Trust Agreement for the Series
which adversely affects in any material respect the interests of any Holder and shall not impose
an additional obligation on any party who has not consented to such amendment; or (ii) except as
provided in Section 8.03(b) below, to make any other changes that Ginnie Mae requests.
(b)
Notwithstanding any other provision herein, without the consent of each Holder
who may be adversely affected, the related Trust Agreement may not be amended to impair or
affect the right of such Holder to receive payment of principal and interest (including any
payment under the Ginnie Mae Guaranty in respect thereof) or to institute suit for the
enforcement of any such payment, all as herein provided, on or after the respective due date of
such payment. In addition, notwithstanding any other provision herein, the Trustee shall not
allow any amendment to the related Trust Agreement if any such amendment would constitute a
variation of the investment of the Holders for purposes of United States Treasury Regulation
section 301.7701-4(c).
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Section 8.04 Persons Deemed Owners.
(a)
The Trustee, Ginnie Mae and the registrar, or any agent of the Trustee, Ginnie Mae or the
registrar, may deem and treat the Holder of the Securities (which, with respect to the Securities, will
be the Book-Entry Depository (or its nominee)), as the absolute owner of such Securities for the
purpose of receiving distributions of principal or interest and for all other purposes, and neither the
Trustee, Ginnie Mae nor the registrar, nor any agent of the Trustee, Ginnie Mae or the registrar, shall
be affected by any notice to the contrary. All such distributions so made to the Holder or upon such
Holder’s order shall be valid and, to the extent of the sum or sums so distributed, effectual to satisfy
and discharge the duty for monies distributable by the Trustee upon such Securities.
(b)
The Holder of a Book-Entry Security is not the beneficial owner of such Security. The rights
of a beneficial owner of a Book-Entry Security with respect to the Trustee, Ginnie Mae and the
registrar may be exercised only through the Holder, which is the Book-Entry Depository or its
nominee. The Trustee, Ginnie Mae and the registrar will have no obligation to a beneficial owner of
a Book-Entry Security because such obligations are satisfied directly to the Book-Entry Depository.
Section 8.05 Third-Party Beneficiary; Ginnie Mae Subrogation.
The Trustee and the Sponsor hereby acknowledge and agree that Ginnie Mae is a third-party
beneficiary of each Trust Agreement and entitled to enforce all obligations of any party to a Trust
Agreement. Ginnie Mae shall be subrogated to all the rights, interests, remedies, powers and
privileges of the Holders in respect of any Ginnie Mae Guaranty payments, to the extent of such
payments.
Section 8.06 Preemption.
Pursuant to Section 306(g)(3)(E)(iv) of the National Housing Act (12 U.S.C. § 1721(g)(3)(E)(iv)),
Ginnie Mae may exercise any right or power granted to it in or recognized under the Trust
Agreement irrespective of any stay arising from, any injunction or other process issued pursuant to,
and any restriction or limitation imposed by any bankruptcy, insolvency, receivership,
conservatorship or other similar law or regulation, state or federal, now or hereafter in effect,
including without limitation 11 U.S.C. §§ 105, 362 and 18 U.S.C. §§ 1821, 1823, each as amended
from time to time.
Section 8.07 Governing Law.
THE TRUST AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE UNITED STATES OF AMERICA. INSOFAR AS
THERE MAY BE NO APPLICABLE LAW OF THE UNITED STATES, THE INTERNAL
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING REGARD TO CONFLICT OF
LAWS PRINCIPLES OTHER THAN SECTIONS 1401 AND 1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) SHALL BE DEEMED REFLECTIVE OF THE LAWS OF
THE UNITED STATES OF AMERICA, INSOFAR AS TO DO SO WOULD NOT FRUSTRATE
THE PURPOSES OF ANY PROVISION OF THE TRUST AGREEMENT OR THE
TRANSACTIONS GOVERNED THEREBY.
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Section 8.08 Successors.
The Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the
Trustee, the Sponsor, or Ginnie Mae, including any successor by operation of law.
Section 8.09 Headings.
The Article and Section headings are for convenience only and shall not affect the construction of the
Trust Agreement.
Section 8.10 Notice and Demand.
Any notice, demand or other communication which by any provision of a Trust Agreement is
required or permitted to be given or served to or upon any Holder may be given or served in writing
by deposit thereof, postage prepaid, in the United States mail addressed to such Holder as such
Holder’s name and address may appear in the records of the Trustee or the registrar. Such notice,
demand or other communication to or upon a Holder shall be deemed to have been sufficiently given
or made, for all purposes, upon mailing or transmission.
RECEIPT AND ACCEPTANCE OF A SECURITY BY OR ON BEHALF OF A HOLDER,
WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL
CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE HOLDER AND ALL
OTHERS HAVING A BENEFICIAL INTEREST IN SUCH SECURITY OF ALL THE TERMS
AND PROVISIONS OF THE RELATED TRUST AGREEMENT.
All demands, notices, approvals and communications under the Trust Agreement shall be in writing
and shall be deemed to have been duly given if personally delivered (including overnight receipted
delivery by a recognized courier service) to or mailed by registered mail, postage prepaid, or
transmitted by any standard form of written telecommunications and confirmed by a similar mailed
writing, to the address provided in the Trust Agreement. The address for Ginnie Mae shall be as
follows:
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
Attention: President
With copies to:
Department of Housing and Urban Development
Office of General Counsel
Room 9254
550 Twelfth Street, SW, Third Floor
Washington, D.C. 20024
Attention: Assistant General Counsel Ginnie Mae/Finance
and the Legal Advisor as of the date of the demand, notice, approval or communication.
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The addresses of all other parties are set forth in the related Sponsor Agreement.
Section 8.11 Severability of Provisions.
Any part, provision, representation or warranty of any Trust Agreement that is prohibited or that is
held to be void or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining parts, provisions, representations or warranties of
that Trust Agreement. Any part, provision, representation or warranty of a Trust Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating
the remaining parts, provisions, representations or warranties of that Trust Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law, the parties to each
Trust Agreement waive any provision of law which prohibits or renders void or unenforceable any
provision of that Trust Agreement.
Section 8.12 Counterparts.
The Trust Agreement may be executed in two or more counterparts, each of which when so executed
and delivered shall be an original, and all of which together shall constitute one and the same
instrument. The Trust Agreement shall inure to the benefit of and be binding upon the parties thereto
and their respective successors and assigns.
ARTICLE IX
TAX ADMINISTRATOR
Section 9.01 Tax Administration.
(a)
Each Holder of a Security hereby designates the Tax Administrator, as its agent,
to perform certain tax administration functions of the related Trust.
(b)
With respect to each Trust, the Tax Administrator shall pay in a timely manner:
(i)
the amount of any federal, state and local taxes imposed on the Trust out
of amounts in the Trust Accounts (except for Location-Based Taxes attributable to the Tax
Administrator, which shall be paid by the Tax Administrator out of its own funds); provided,
however, that the Tax Administrator may decide, provided it has received the written permission
of Ginnie Mae, to pay or deposit such tax but subsequently to contest such tax, or, if permitted
by law, to refrain from paying such tax pending the outcome of the contest of such tax, and
(ii)
out of its own funds, any and all tax related expenses (not including taxes)
of the Trust, including but not limited to any professional fees or expenses related to audits or
any administrative or judicial proceedings with respect to each such Trust that involves the
Internal Revenue Service or state or local tax authorities; provided, however, that the Tax
Administrator may pay out of amounts in the Trust Accounts the reasonable cost of contesting a
tax imposed on the Trust, provided that the Tax Administrator has received Ginnie Mae’s written
permission to engage in the contest.
VI-13-26
(iii) With respect to each Trust, the Tax Administrator shall maintain all books,
records, and supporting documents that are necessary to comply with any and all aspects of the
Tax Administrator’s duties under the Trust Agreement and other closing documents.
(iv)
For each Trust, the related Tax Administrator shall timely prepare, sign
(or, as appropriate, submit to the Trustee for signature) and file all of the federal, state, and local
tax and information returns of the Trust in a manner consistent with the Offering Circular. The
expenses of preparing and filing such returns shall be borne by the Tax Administrator without
any right to reimbursement by the Trustee or from amounts on deposit in the Trust Accounts.
(v)
The Tax Administrator for each Trust shall assist the Trustee in
performing in a timely manner all reporting and other tax compliance duties that are the
responsibility of the Trust under federal, state or local tax law. Upon the Tax Administrator’s
request, the Trustee shall provide the Tax Administrator with a list of Security holders of record
and any other information reasonably necessary to the Tax Administrator in the performance of
its duties.
(vi)
With respect to each Trust, the Tax Administrator and the Trustee shall
take any action or cause any Trust to take any action necessary to create or maintain the status of
such Trust as a grantor trust pursuant to Section 2.06 hereof.
(vii) With respect to each Trust, neither the Tax Administrator nor the Trustee
shall take any action or fail to take any action, or cause any Trust to take any action or fail to take
any action that, if taken or not taken, could endanger the status of any such Trust as a grantor
trust pursuant to Section 2.06 hereof.
(viii) With respect to each Trust, unless otherwise provided in the related Trust
Agreement, the fiscal year of such Trust shall run from January 1 (or from the Closing Date, in
the case of the first fiscal year) through December 31.
(ix)
The Trustee shall reimburse the Trust for any Location-Based Taxes.
Section 9.02 Resignation and Removal of the Tax Administrator.
(a)
Unless otherwise provided in the Trust Agreement, the Trustee shall act as Tax
Administrator. The Trustee may subcontract with another Person acceptable to Ginnie Mae to
undertake these obligations. In addition, Ginnie Mae reserves the right to require the Trustee to
subcontract with a Person designated by Ginnie Mae to perform these duties. Execution of a
subcontract shall not relieve the Trustee, however, of any responsibility for the tax
administration of the Trust or of liability for breaches of the obligations of the Tax Administrator
under the Trust Agreement.
(b)
If the Tax Administrator for a Trust is unable for any reason to fulfill its duties as
Tax Administrator, the Tax Administrator shall immediately notify Ginnie Mae and the Trustee.
Upon notification, the Trustee may appoint another Person acceptable to Ginnie Mae to act as
Tax Administrator or Ginnie Mae may direct the Trustee to appoint another Person to act in such
capacity.
VI-13-27
(c)
Except as provided in a Trust Agreement, Ginnie Mae has reserved the right to
remove the Tax Administrator for cause at any time. For the purposes of this Section “cause”
shall mean one of the following:
(d)
The Tax Administrator’s inability or failure to take any actions required under the
related Trust Agreement;
(e)
Failure on the part of the Tax Administrator to observe or perform any other of its
covenants set forth in the related Trust Agreement;
(f)
A court having jurisdiction entering a decree or order for relief in respect of the
Tax Administrator in an involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
sequestrator (or other similar official) of the Tax Administrator or for all or substantially all of its
property, or order the winding up or liquidation of its affairs; or
(g)
The Tax Administrator commencing a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or consenting to the entry
of an order for relief in an involuntary case under any such law, or consenting to the appointment
of or taking of possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) of the Tax Administrator or for any substantial part of its property, or
making any general assignment for the benefit of creditors, or the Tax Administrator failing
generally to pay its debts as they become due.
(h)
Any resignation or removal of the Tax Administrator and appointment of a
successor Tax Administrator pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor Tax Administrator as provided in
Section 9.02(e) below. Any liability of the Tax Administrator under a Trust Agreement arising
prior to such termination shall survive such termination.
(i)
The successor Tax Administrator appointed to serve as Tax Administrator of a
Trust as provided in this Section shall execute, acknowledge and deliver to Ginnie Mae and its
predecessor Tax Administrator a written acceptance of such appointment under the related Trust
Agreement, and thereupon the resignation or removal of the predecessor Tax Administrator shall
become effective and such successor Tax Administrator, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and obligations of its
predecessor under such Trust Agreement, with the same effect as if originally named as Tax
Administrator therein.
*
*
*
VI-13-28
Exhibit 1
See Form of Issuance Statement for SMBS Transactions
at page VI-9 in this Part VI of the Guide.
VI-13-29
FORM OF TRANSACTION OPINION OF
TRUST COUNSEL FOR SMBS TRANSACTIONS
Pursuant to the SMBS Sponsor Agreement, Trust Counsel must deliver an opinion substantially in
the form that follows as a condition to closing. In general, this condition must be met by the delivery
of an opinion in the form that follows, including the materials marked with square brackets “[].” If
an opinion includes the bracketed language, it need not include the language marked with braces
“{}.”
VI-14-0
FORM OF TRANSACTION OPINION OF
TRUST COUNSEL FOR SMBS TRANSACTIONS
____________ __, 20____
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
[Trustee]
[Sponsor]
Ginnie Mae Stripped Mortgage-Backed Securities Trust 20 -[ ]
Ladies and Gentlemen:
We have acted as trust counsel in connection with the issuance by the Ginnie Mae Stripped
Mortgage-Backed Securities Trust 20____-___ (the “SMBS Trust”), established pursuant to a trust
agreement (the “SMBS Trust Agreement”), dated as of ____________ __, 20____, by and between
___________________, as trustee of the Trust (the “Trustee”), and _____________________, a(n)
________________ corporation (the “Sponsor”), and incorporating by reference the Standard Trust
Provisions for Stripped Mortgage-Backed Securities Trusts, April 1, 2008 Edition (the “SMBS
Standard Trust Provisions”), of approximately $[ ] aggregate principal amount of securities (the
“Securities”) guaranteed by the Government National Mortgage Association (“Ginnie Mae”). The
Securities are being sold to the Sponsor pursuant to the SMBS Trust Agreement. Capitalized terms
used but not otherwise defined herein shall have the meanings assigned to them in the glossary
contained in the Ginnie Mae Multiclass Securities Guide currently in effect.
The SMBS Base Offering Circular, dated ___________ __, 20____, and the related Offering
Circular Supplement, dated _______________ __, 20____ (collectively, the “Offering Circular”),
were prepared in connection with the offering of the Securities.
The asset of the Trust consists primarily of a Ginnie Mae Platinum Certificate (the “Trust Asset”)
sold to the SMBS Trust by the Sponsor. In connection with the issuance of the Securities, Ginnie
VI-14-1
Mae is guaranteeing the payment of the full amount of principal and interest on each Security
pursuant to the Guaranty Agreement and Section 3 of the Standard Sponsor Provisions, April 1, 2008
Edition (the “SMBS Standard Sponsor Provisions”).
In connection with the foregoing, we have examined the following documents:
(a)
A copy of the SMBS Standard Trust Provisions;
(b)
A signed copy of the SMBS Trust Agreement, which incorporates by reference
the SMBS Standard Trust Provisions;
(c)
A copy of the Standard SMBS Sponsor Provisions;
(d)
A signed copy of the Sponsor Agreement, dated __________ __, 20__, between
Ginnie Mae and the Sponsor, which incorporates by reference the SMBS Standard
Sponsor Provisions;
(e)
A copy of the Offering Circular;
(f)
the Issuance Statement; {and}
(g)
the Articles of Incorporation and Bylaws (collectively, the “Constituent
Documents”) of the Sponsor, together with good standing certificates with respect to the
Sponsor; and
[(h)
the resolutions of the Sponsor pertaining to the subject transactions, certified by
the Secretary or Assistant Secretary of the Sponsor.]
[(i)
the opinion of counsel of the Sponsor, delivered in connection with this
transaction (the “Sponsor’s Opinion”).]
The SMBS Trust Agreement and the Sponsor Agreement are collectively referred to herein as the
“Agreements.”
For purposes of the opinions expressed below, we have assumed (a) the authenticity of all documents
submitted to us as originals, (b) the conformity to the originals of all documents submitted as
certified or photostatic copies and the authenticity of the originals of such copies, (c) the genuineness
of signatures not witnessed by us, (d) the legal capacity of natural persons and (e) the due
authorization, execution and delivery of all documents by all parties and the validity and binding
effect thereof (other than [the due authorization, execution and delivery of documents by the Sponsor
and] the validity and binding effect of documents upon the Sponsor).
As to factual matters, we have relied upon representations included in the aforementioned documents
and in other documents delivered at the closing, upon certificates of officers of the Sponsor and upon
certificates of public officials. In addition, we have obtained from officers and employees of the
parties described above such other certificates and assurances, and we have examined such records,
other documents and questions of law, as we have considered necessary or appropriate for purposes
VI-14-2
of rendering this opinion letter. [Whenever the phrase “to our knowledge” is used herein, it refers to
the actual knowledge of the attorneys of this firm involved in the representation for this transaction.]
The enforceability of the Agreements against the parties thereto is subject to the provisions of
bankruptcy, insolvency, reorganization, or moratorium laws or laws relating to or affecting the rights
of creditors generally and to principles of equity, whether considered at law or in equity, except that
Ginnie Mae may enforce the Agreements against the parties thereto notwithstanding any bankruptcy,
insolvency, reorganization or moratorium law, or any law relating to or affecting the rights of
creditors generally, to the extent that such law is preempted by the authorizing law for the Ginnie
Mae Multiclass Securities Program set forth at 12 U.S.C. § 1721(g)(3)(E)(iv).
We do not purport to express an opinion as to the laws of any jurisdiction other than the [State of
incorporation of the Sponsor, the] State of New York and the United States of America.
I.
Based upon, and subject to, the foregoing and such other documents and information as we have
considered necessary for the purposes hereof, we are of the opinion that:
[1.
The Sponsor has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation.
2.
The Sponsor has the corporate power and authority to enter into the transactions
contemplated by the Agreements.
3.
The Sponsor is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction that requires such qualification wherein
it owns or leases material properties, except where the failure so to qualify would not
have a material adverse effect on such company’s ability to perform its obligations under
the Agreements.
4.
To our knowledge, there is no action, suit, proceeding or investigation pending or
threatened against the Sponsor that reasonably could be expected to affect adversely (a)
the Sponsor’s ability to carry on its business substantially as now conducted; (b) the
transfer of the Trust Assets; (c) the issuance of the Securities or (d) the execution,
delivery, performance or enforceability of the Agreements, including the Sponsor’s
performance under any indemnification provisions.]
{1.
The Sponsor’s Opinion is satisfactory in form and scope to us, and we believe that you
may properly rely on it.}
{2}
[5.]
Assuming the due authorization, execution and delivery of the SMBS Trust
Agreement by the [Trustee] {parties thereto}, the provisions of the SMBS Trust Agreement are
sufficient to establish a trust under and pursuant to the governing laws of the SMBS Trust
Agreement.
VI-14-3
{3}
[6.]
[Each of the Agreements has been duly executed and delivered by an authorized
signatory of the Sponsor, and] {Assuming the due authorization, execution and delivery of the
Agreements by the parties thereto,} each constitutes a valid, legal and binding agreement of the
Sponsor, enforceable against the Sponsor in accordance with its respective terms.
{4}
[7.]
The Securities conform in all material respects to the descriptions thereof
contained in the Offering Circular. The Securities have been duly and validly authorized and
delivered by the Trustee in accordance with the SMBS Trust Agreement and are duly and validly
issued and entitled to the benefits of such SMBS Trust Agreement.
{5}
[8.]
The Securities are exempt from the registration requirements of the Securities Act
of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder,
and the Securities constitute “exempted securities” under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated thereunder.
{6}
[9.]
The SMBS Trust Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended, and the trust fund created thereby is not required to be
registered under the Investment Company Act of 1940, as amended.
{7}
[10.] No consent, approval, authorization or order of (a) any ____________ State or
federal court or (b) any ______________ State or federal governmental agency or body is
required for the consummation by the SMBS Trust of the transactions contemplated by the
Agreements; provided, however, that we express no opinion with respect to requirements under
local and state securities laws, including but not limited to such as may be required under the
state securities or blue sky laws, of any jurisdiction in connection with the distribution of the
Securities.
{8}
[11.] The statements set forth under the headings “Terms Sheet” and “Description of
the Securities” in the Offering Circular Supplement, and under the headings “Description of the
Securities” and “The Trusts” in the SMBS Base Offering Circular, insofar as such statements
together purport to summarize certain provisions of the Agreements, provide a fair summary of
such provisions.
{9}
[12.] The statements in the Offering Circular Supplement under the headings “ERISA
Matters” and “Legal Investment Considerations,” and in the SMBS Base Offering Circular under
the headings “ERISA Considerations” and “Legal Investment Considerations,” insofar as they
describe federal statutes and regulations or constitute legal conclusions with respect thereto, have
been prepared or reviewed by us, and such statements fairly summarize such statutes and
regulations.
{10} [13.] The Securities qualify as “guaranteed governmental mortgage pool certificates”
within the meaning of 29 C.F.R. § 2510.3-101(i)(2).
II.
We have participated in various conferences with the appropriate representatives of the Sponsor and
the Accountants. At those conferences, the contents of the Offering Circular were discussed and
VI-14-4
revised. Since the dates of those conferences, we have inquired of appropriate representatives
whether there has been any material change in the affairs of the Sponsor.
Because of the inherent limitations in the independent verification of factual matters, we are not
passing upon, and do not assume any responsibility for, and make no representation that we have
independently verified, the accuracy, completeness or fairness of the statements contained in the
Offering Circular, except as specifically set forth in paragraphs [11 and 12] {8 and 9} of Part I of our
opinion above. Also, we do not express any opinion or belief as to the financial statements or other
numerical, financial or statistical information contained in the Offering Circular. However, subject to
the foregoing, we advise you that nothing has come to our attention that would lead us to believe that
the Offering Circular, as of the date thereof and at the date hereof, contained or contains any untrue
statement of a material fact or omitted or omits to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they were made, not
misleading (except that we express no opinion with respect to the numerical, financial and statistical
data contained in the Offering Circular).
We express no opinion as to any matter other than as expressly set forth herein, and no other opinion
is to be, or may be, inferred or implied herefrom. This opinion is given as of the date hereof and is
based on facts and conditions presently known to us and laws and regulations currently in effect, and
we do not undertake, and hereby disclaim, any obligation to advise you of any change in any matters
set forth herein.
This opinion letter is being furnished to you solely for your benefit and may not be relied upon by,
nor may copies be delivered to, any person without our prior written consent.
U.S. Treasury Circular 230 Notice
To ensure compliance by this law firm with requirements imposed by the Internal
Revenue Service, we inform you that (a) this advice was not intended or written to be used,
and cannot be used, for the purpose of avoiding United States federal tax penalties, (b) this
advice was written to support the promotion or marketing of the transactions or matters
addressed herein and (c) any taxpayer to whom such transactions or matters are being
promoted, marketed or recommended should seek advice based on its particular
circumstances from an independent tax advisor.
Very truly yours,
VI-14-5
FORM OF OPINION OF SPONSOR FOR SMBS TRANSACTIONS
_______________, 20___
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
[Trustee]
[Sponsor]
Re:
Guaranteed Stripped Mortgage-Backed Securities
Ginnie Mae Stripped Mortgage-Backed Securities Trust 2004-_
Ladies & Gentlemen:
I am employed as [General] counsel by _____________________________ (“Sponsor”) and, in
such capacity, have acted as counsel to Sponsor, a ________ corporation, in connection with the
issuance, by the Ginnie Mae Stripped Mortgage-Backed Securities Trust 2004-_ (the “SMBS
Trust”), established pursuant to a trust agreement (the “SMBS Trust Agreement”) dated as of
_______, 20___, by and between ______________________________, as trustee of the SMBS
Trust (the “Trustee”), and the Sponsor, and incorporating by reference the Standard Trust Provisions
for Stripped Mortgage-Backed Securities Trusts, April 1, 2008 Edition, of approximately $[
]
aggregate principal amount of securities (the “Securities”) guaranteed by the Government National
Mortgage Association (“Ginnie Mae”). The Securities are being sold to the Sponsor pursuant to the
SMBS Trust Agreement. Capitalized terms not otherwise defined herein shall have the meanings
assigned to them in the glossary contained in the Ginnie Mae Multiclass Securities Guide currently in
effect.
In connection with this opinion, I [or others under my supervision] have examined the SMBS Trust
Agreement and a sponsor agreement (the “Sponsor Agreement” and, together with the Trust
Agreement, the “Agreements”) dated as of _______, 20”____”, by and between Ginnie Mae and the
Sponsor and incorporating by reference the Standard SMBS Sponsor Provisions, April 1, 2008
Edition. I [or others under my supervision] have also examined and am familiar with originals or
copies, certified or otherwise identified to my satisfaction, of such documents as I have deemed
necessary or appropriate as a basis for the opinion set forth below.
In my examination, I have assumed the genuineness of all signatures, the legal capacity of natural
persons, the conformity to original documents of all documents submitted to me as certified or
photostatic copies, the authenticity of the originals of such copies, and the due authorization,
execution and delivery of all documents by all parties and the validity and binding effect thereof
(other than the due authorization, execution and delivery of documents by the Sponsor as to which I
VI-15-1
express an opinion herein). As to any fact material to this opinion that I did not independently
establish or verify, I have relied upon statements and representations of officers and other
representatives of the Sponsor. Whenever the phrase “to my knowledge” is used herein, it refers to
the actual knowledge of the attorneys employed by the Sponsor who are involved in the
representation for this transaction.
I am admitted to the Bar of the State of ________, and I express no opinion as to the laws of any
jurisdiction other than the laws of the State of ______________, [the corporate laws of the State of
________________] and, to the extent specifically referred to herein, the laws of the United States of
America. Based upon and subject to the foregoing, I am of the opinion that:
1. The Sponsor has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation.
2. The Sponsor has the corporate power and authority to enter into the transactions and
perform the obligations contemplated by the Agreements.
3. The Sponsor is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction that requires such qualification wherein it
owns or leases material properties, except where the failure so to qualify would not
have a material adverse effect on the Sponsor’s ability to perform its obligations
under the Agreements.
4. There is no action, suit, proceeding or investigation pending or, to my knowledge,
threatened against the Sponsor that reasonably could be expected to affect adversely
(a) the Sponsor’s ability to carry on its business substantially as now conducted, (b)
the transfer of the Trust Assets, (c) the transfer of the Securities or (d) the execution,
delivery, performance or enforceability of the Agreements, including the Sponsor’s
performance under any indemnification provisions.
5. The Agreements have been duly executed and delivered by the Sponsor.
6. No consent, approval, authorization or order of (a) any ____________ State or federal
court or (b) any ______________ State or federal governmental agency or body is
required for the consummation by the Sponsor of the transactions contemplated by
the Agreements, except for those that have been obtained by the Sponsor and are in
full force and effect; provided, however, that I express no opinion with respect to
requirements under federal or state securities or blue sky laws, of any jurisdiction in
connection with the distribution of the Securities.
I express no opinion as to any matter other than as expressly set forth herein, and no other opinion is
to be, or may be, inferred or implied herefrom. This opinion is given as of the date hereof and is
based on facts and conditions presently known to me and laws and regulations currently in effect, and
I do not undertake, and hereby disclaim, any obligation to advise you of any change in any matters
set forth herein.
I consent to reliance upon this opinion letter by Ginnie Mae for the purpose of complying with its
requirements in connection with the Sponsor Agreement and by [Trust Counsel] in connection with
VI-15-2
the delivery of its opinion related to the Agreements. Except as provided in the preceding sentence,
this opinion letter may not be relied upon by, nor may copies be delivered to, any person without my
prior written consent.
Very truly yours,
VI-15-3
FORM OF TAX OPINION OF
TRUST COUNSEL FOR SMBS TRANSACTIONS
____________ __, 20___
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
Ginnie Mae Stripped Mortgage-Backed Securities Trust 2004-_
c/o [Trustee]
[Trustee]
[Sponsor]
Ginnie Mae Stripped Mortgage-Backed Securities Trust 2004
Certain Tax Matters
Ladies and Gentlemen:
We have acted as trust counsel in connection with the formation of the Ginnie Mae Stripped
Mortgage-Backed Securities Trust 20____-_ (the “SMBS Trust”), established pursuant to a trust
agreement (the “SMBS Trust Agreement”), dated as of ____________ __, 20____, by and
between___________________, as trustee of the Trust (the “Trustee”), and __________________,
a(n) ________________ corporation (the “Sponsor”), and incorporating by reference the SMBS
Standard Trust Provisions for Ginnie Mae Stripped Mortgage-Backed Securities Trusts, April 1,
2008 Edition (the “SMBS Standard Trust Provisions”), and the issuance of $[
] aggregate
principal amount of its Guaranteed Stripped Mortgage-Backed Securities (the “Securities”). The
Securities consist of the Classes of Securities listed on page __ of the Offering Circular Supplement
dated _________, 20____ (the “Offering Circular Supplement”). The Securities are being sold
pursuant to the SMBS Base Offering Circular dated ___________________ __, 20___, and an
Offering Circular Supplement (together, the “Offering Circular”). Capitalized terms used but not
defined herein shall have the meanings assigned to them in the glossary contained in the Ginnie Mae
Multiclass Securities Guide currently in effect.
We have reviewed the originals or copies of: (i) the SMBS Trust Agreement, including the SMBS
Standard Trust Provisions; (ii) the Guaranty Agreement dated as of _______________ __, 20____;
VI-16-1
and (iii) the Offering Circular. We also have reviewed such other documents relating to the
transaction and made such other factual and legal inquiries as we have considered necessary for
purposes of the opinions given below.
Based on the foregoing, we are of the opinion that, with respect to this transaction, the statements and
legal conclusions contained in the Offering Circular under the caption “Certain Federal Income Tax
Consequences” are correct in all material respects and the discussion thereunder does not omit any
material provision with respect to the matters covered. Also based on the foregoing and subject to
the qualifications stated herein, we are of the further opinion that, Ginnie Mae Stripped MortgageBacked Securities Trust 20 “____”-_ will constitute a grantor trust within the meaning of Sections
671 through 679 of the Code, and not a partnership or an association taxable as a corporation.
You should be aware that the above opinions and the discussion contained in the Offering Circular
under the caption “Certain Federal Income Tax Consequences” represent conclusions as to the
application of existing law to the transaction described herein. There can be no assurance that
existing law will not change or that contrary positions will not be taken by the Internal Revenue
Service.
No opinion has been sought and none has been given concerning the tax consequences of the
transaction described herein or of the acquisition, ownership, or disposition of the Securities under
the laws of any state or locality.
The opinions expressed herein are solely for the information and use of the addressees and may not
be relied upon or otherwise used for any purpose by any other person without our express written
consent.
U.S. Treasury Circular 230 Notice
To ensure compliance by this law firm with requirements imposed by the Internal
Revenue Service, we inform you that (a) this advice was not intended or written to be used,
and cannot be used, for the purpose of avoiding United States federal tax penalties, (b) this
advice was written to support the promotion or marketing of the transactions or matters
addressed herein and (c) any taxpayer to whom such transactions or matters are being
promoted, marketed or recommended should seek advice based on its particular
circumstances from an independent tax advisor.
Very truly yours,
VI-16-2
FORM OF OPINION OF TRUSTEE’S COUNSEL FOR SMBS TRANSACTIONS
____________ __, 20__
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
Ginnie Mae Stripped Mortgage-Backed Securities Trust 2004-_
c/o [Trustee]
[Sponsor]
Ginnie Mae Stripped Mortgage-Backed Securities Trust 20 “ ” -
Ladies and Gentlemen:
We have acted as special counsel to ________________________ in its capacity as trustee (the
“Trustee”) in connection with the issuance by the Ginnie Mae Stripped Mortgage-Backed Securities
Trust 20 “ ” -_ (the ”SMBS Trust”), established pursuant to a trust agreement (the “SMBS Trust
Agreement”), dated as of ____________ __, 20 “ ” , by and between the Trustee and
_____________________, a(n) ________________ corporation (the “Sponsor”), and incorporating
by reference the SMBS Standard Trust Provisions, April 1, 2008 Edition (the “SMBS Standard Trust
Provisions”), of $[ ] aggregate principal amount of securities (the “Securities”) guaranteed by the
Government National Mortgage Association (“Ginnie Mae”). The Securities are being sold to the
Sponsor pursuant to the SMBS Trust Agreement. Capitalized terms not otherwise defined herein
shall have the meanings assigned to them in the glossary contained in the Ginnie Mae Multiclass
Securities Guide currently in effect.
In connection with the foregoing, we have examined the following documents:
(a)
A copy of the SMBS Standard Trust Provisions;
(b)
A signed copy of the SMBS Trust Agreement, which incorporates by reference
the SMBS Standard Trust Provisions;
(c)
the Issuance Statement;
VI-17-1
(d)
(the Articles of [Incorporation] [Association] and Bylaws of the Trustee, together
with good standing certificates with respect to the Trustee; and
(e)
the resolutions of the Trustee pertaining to the subject transactions, certified by
the Secretary or an Assistant Secretary of the Trustee.
For purposes of the opinions expressed below, we have assumed (a) the authenticity of all documents
submitted to us as originals, (b) the conformity to the originals of all documents submitted as
certified or photostatic copies and the authenticity of the originals of such copies, (c) the genuineness
of signatures not witnessed by us, (d) the legal capacity of natural persons, and (e) the due
authorization, execution and delivery of all documents by all parties and the validity and binding
effect thereof (other than the due authorization, execution and delivery of documents by the Trustee
and the validity and binding effect of documents upon the Trustee as to which we express an opinion
herein).
As to factual matters, we have relied upon representations included in the aforementioned documents
and in other documents delivered at the closing, upon certificates of officers of the Trustee and upon
certificates of public officials. In addition, we have obtained from officers and employees of the
parties described above such other certificates and assurances, and we have examined such records,
other documents and questions of law, as we have considered necessary or appropriate for purposes
of rendering this opinion letter. Whenever the phrase “to our knowledge” is used herein, it refers to
the actual knowledge of the attorneys of this firm involved in the representation of the Trustee in this
transaction.
The enforceability of the SMBS Trust Agreement against the parties thereto is subject to the
provisions of bankruptcy, insolvency, reorganization, or moratorium laws or laws relating to or
affecting the rights of creditors generally and principles of equity, whether considered at law or in
equity, except that Ginnie Mae may enforce the SMBS Trust Agreement against the parties thereto
notwithstanding any bankruptcy, insolvency, reorganization or moratorium law, or any law relating
to or affecting the rights of creditors generally, to the extent that such law is preempted by the
authorizing law for the Ginnie Mae Multiclass Securities Program set forth at 12 U.S.C. §
1721(g)(3)(E)(iv).
We do not purport to express an opinion as to the laws of any jurisdiction other than the [State of
___________________, the] State of New York and the United States of America.
Based upon, and subject to, the foregoing and such other documents and information as we have
considered necessary for the purposes hereof, we are of the opinion that:
1.
The Trustee is a(n) [______________________ corporation] [national banking
association], duly organized and validly existing in good standing under the laws
of [____________] [the United States of America], and has all requisite power
and authority to enter into the SMBS Trust Agreement and to perform its
obligations thereunder.
2.
To our knowledge, there is no action, suit, proceeding or investigation pending or
threatened against the Trustee that could materially adversely affect the Trustee’s
ability to perform its obligations under the SMBS Trust Agreement.
VI-17-2
3.
The SMBS Trust Agreement has been duly authorized, executed and delivered by
the Trustee, and constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, subject to the
limitations noted above.
4.
The Securities have been duly and validly authorized and delivered by the Trustee
in accordance with the SMBS Trust Agreement and are duly and validly issued
and entitled to the benefits of the SMBS Trust Agreement.
5.
The performance by the Trustee of its duties pursuant to the SMBS Trust
Agreement does not conflict with or result in a breach or violation of any term or
provision of, or constitute a default under, any statute or regulation currently
governing the Trustee.
6.
Assuming that the SMBS Trust qualifies as a grantor trust (within the meaning of
Sections 671 through 679 of the Internal Revenue Code) for federal income tax
purposes, it will not be subject to any tax imposed by the State of [Trustee’s
principal place of business and, if different, the place where the principal trustee
functions with respect to the Trust will take place] or any political subdivision
thereof on its assets or income, except to the extent it is subject to federal income
tax.
We express no opinion as to any matter other than as expressly set forth herein, and no other opinion
is to be, or may be, inferred or implied herefrom. This opinion is given as of the date hereof and is
based on facts and conditions presently known to us and laws and regulations currently in effect, and
we do not undertake, and hereby disclaim, any obligation to advise you of any change in any matters
set forth herein.
We consent to reliance upon this opinion letter by addressees hereto for the purpose of complying
with your requirements in connection with this transaction only as it relates to the specific legal
issues identified herein. Except as provided in the preceding sentence, this opinion letter may not be
relied upon by, nor may copies be delivered to, any person without our prior written consent.
Very truly yours,
VI-17-3
FORM OF ACCOUNTANTS’ AGREED-UPON PROCEDURES LETTER
AS OF THE CLOSING DATE FOR SMBS TRANSACTIONS
[
]
[Sponsor]
[Co-Sponsor]
[c/o Sponsor]
[Address]
[City, State Zipcode]
Government National Mortgage Association
550 12th Street, SW, Third Floor
Washington, D.C. 20024
Independent Accountants’ Report on
Applying Agreed-Upon Procedures
Ginnie Mae Stripped Mortgage-Backed Securities Trust [
]
Ladies and Gentlemen:
We have performed the procedures enumerated below, which were agreed to by the addressees,
relating to the issuance of $[
] aggregate Original Class Principal Balance of Guaranteed
Stripped Mortgage-Backed Securities Ginnie Mae SMBS Trust [
] (the Securities) pursuant
to a Trust Agreement dated as of __________, 20____ (the “Trust Agreement”). This agreed-upon
procedures engagement was performed in accordance with attestation standards established by the
American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the
responsibility of the addressees. Consequently, we make no representations regarding the sufficiency
of the procedures described below either for the purpose for which this letter has been requested or
for any other purpose. Capitalized terms used but not defined herein have the meanings ascribed to
them in the Trust Agreement.
We are independent public accountants with respect to Ginnie Mae Stripped Mortgage-Backed
Securities Trust [
] within the meaning of Rule 101 of the Rules of Conduct of the Code of
Professional Conduct of the American Institute of Certified Public Accountants.
For purposes of this letter, we obtained the following:
1. The Trust [
]Offering Circular Supplement;
2. The Trust Agreement;
3. An electronic listing of Trust Assets provided to us by the Sponsor; and
VI-18-1
4. The attached schedule of yields for each Class of Securities provided to us by the
Sponsor (“Schedule B”).
Based on the foregoing, we performed the following procedures.
1. Using the aforementioned electronic list of Trust Assets, we printed out the schedule
of Trust Assets that is attached hereto as Schedule A. In addition, we provided the
same electronic list of Trust Assets to the Information Agent, the Financial Advisor
and the Trustee through Ginnie Mae’s Internet Web-site.
2. For the Trust Asset shown on Schedule A, we compared the Certificate Rate shown
on Schedule A to the corresponding information shown for such Trust Asset on
Ginnie Mae’s Internet Web-site, and found them to be in agreement.
3. For each Trust Asset shown on Schedule A, we recomputed the current principal
balance by multiplying the ______, 20___ factor obtained from Ginnie Mae’s Internet
Web-site for that Trust Asset, by the original principal balance shown on Schedule A,
and compared such recomputed amount to the corresponding current principal
balance shown on Schedule A and found them to be in agreement.
4. For each Trust Asset shown on Schedule A as having an Issue Date prior to
__________, ____, we compared the CUSIP number, Trust Asset pool number, Trust
Asset pool type, Trust Asset pool suffix, Issue Date, Certificate Rate and Maturity
Date shown on Schedule A to the corresponding information shown for that Trust
Asset in the Ginnie Mae Factor Tape that was made available on ______, ____ from
SECTOR Inc. (a SIAC Company (hereinafter referred to as “SIAC”)) (the “Factor
Report”) and found them to be in agreement.
5. For each Trust Asset shown on Schedule A as having an Issue Date of ______,____,
we compared the items of information listed in the immediately preceding paragraph
to the corresponding information obtained from the SIAC Ginnie Mae Daily Pool
Tapes for __________, 20____ (together with the SIAC Ginnie Mae Daily Pool
Tapes for ______, 20___, the “New Pool Tapes”) and found them to be in agreement.
6. For each Trust Asset shown on Schedule A as having an Issue Date prior to
__________, 20____, we recomputed the current principal balance by multiplying a
factor obtained from the Factor Report for that Trust Asset by the original principal
balance shown on Schedule A, and compared such recomputed amount to the current
principal balance shown on Schedule A and found them to be in agreement.
7. For each Asset shown on Schedule A as having an Issue Date of _______, ____, we
determined that the current principal balance shown on Schedule A is equal to the
original principal balance shown on Schedule A.
8. For each Trust Asset shown on Schedule A as having an Issue Date prior to _____,
20__, we compared the current Weighted Average Remaining Term to Maturity (the
“WARM”) and the current Weighted Average Loan Age (the “WALA”) shown on
Schedule A to the corresponding information for that Trust Asset derived from a
VI-18-2
SIAC Ginnie Mae Quarterly Weighted Average Tape (the “Quarterly Weighted
Average Tape”) (using the most recent tape for which such information was
available) using the methodology relating to generic pools set forth in The Securities
Industry and Financial Markets Association’s Standard Formulas for the Analysis of
Mortgage-Backed Securities and Other Related Securities - Chapter SF Section C (the
“Standard Formulas”), and found them to be in agreement.
9. For each Trust Asset shown on Schedule A as having an Issue Date on or subsequent
to __________, 20____, we compared the current WARM and WALA shown on
Schedule A to the corresponding information for that Trust Asset derived from the
New Pool Tapes using the methodology relating to generic pools set forth in the
Standard Formulas and found them to be in agreement.
10. For each Trust Asset shown on Schedule A, we compared the current Weighted
Average Coupon (the “WAC”) shown on Schedule A to the corresponding
information for that Trust Asset derived using the Certificate Rate shown on Schedule
A and an assumed fixed servicing spread of 0.50% and found them to be in
agreement.
11. For each Trust Asset shown on Schedule A, we compared the current WAC shown on
Schedule A to the corresponding information for that Trust Asset derived from the
Quarterly Weighted Average Tape (using the most recent tape for which such
information was available) using the methodology relating to generic pools set forth
in the Standard Formulas and found them to be in agreement.
12. We compared the current WAM and current WAC of each MBS to the ranges set
forth in the Offering Circular Supplement and found them to be within the respective
specified ranges.
13. We recomputed the sum of the current balances of the Trust Assets shown on
Schedule A (the “Aggregate Balance”) and found each such amount to be in
agreement with the corresponding amount shown on Schedule A. We determined
that the Aggregate Balance, (net of any related portion thereof payable as part of the
Trustee Fee) is not less than the aggregate Original Class Principal Balance of the
Securities.
14. We compared the CUSIP number, Trust Asset pool type, Trust Asset pool number,
Trust Asset pool suffix, Certificate Rate, Issue Date, Maturity Date and original
principal balance of each Trust Asset shown on Schedule A to the corresponding
information included in the Trustee’s Receipt and Safekeeping Agreement provided
to us by the Trustee and found them to be in agreement.
15. We compared the WAC of each Trust Asset associated with the Trustee Fee and
determined that the WAC is equal to the lowest WAC of the Trust Assets associated
with the Platinum Security.
16. We compared the maturity dates of the Trust Assets associated with the Trustee Fee
and determined that they are equal to the maturity date of the Platinum Security.
VI-18-3
17. Based upon the assumption that each Mortgage Loan underlying the Trust Asset
shown on Schedule A has a remaining term to maturity equal to its current WARM, a
loan age equal to its current WALA and an interest rate equal to its current WAC,
using the Trust Assets shown in Schedule A, the terms of the Securities set forth in
the Trust Agreement, and the applicable definitions and methodologies set forth in the
Trust _______ Offering Circular Supplement under the caption “Yield Tables” and
also assuming that (i) the underlying Mortgage Loans prepay at each of the constant
rates of PSA shown on Schedule B, (ii) payments on the Trust Assets and the
Securities are received on the [16th or 20th] day of the month and (iii) no optional
termination is exercised, we recomputed (a) the yield and (b) the absolute and
percentage differences between each such yield and the yield for such Class set forth
in the Trust _______ Offering Circular Supplement at the corresponding constant rate
of PSA. We compared such recomputed yields, absolute differences and percentage
differences (expressed as a percentage of the yield set forth in the Trust _______
Offering Circular Supplement) to the corresponding information shown on Schedule
B and found them to be in agreement.
Using the Trust Assets on Schedule A and the terms of the Securities set forth in the Trust
Agreement, and assuming (i) the timely payment of principal and interest on the Trust Assets, (ii)
that no taxes are imposed on the Trust and (iii) that no expenses are incurred, we determined that
payments on the Trust Assets would be adequate to make full and timely payments of principal and
interest on the Securities and to reduce the Class Principal Balance or Class Notional Balance of each
Class of Securities to zero by its maturity date, in each case, in accordance with the terms as set forth
in the Trust Agreement regardless of the rate of prepayments on the Mortgage Loans underlying the
Trust Assets.
It should be understood that we make no representations as to (a) questions of legal interpretation; (b)
the sufficiency of these procedures for your purposes; (c) the accuracy of any information reported in
Ginnie Mae’s Internet Web-site, the Underlying Certificate Disclosure Documents, the Factor
Report, the Quarterly Weighted Average Tapes, the New Pool Tapes or Bloomberg, L.P.; (d) the
accuracy of the original principal balances set forth on the Trustee’s Receipt; (e) the reasonableness
of any of the assumptions used above; or (f) whether the yields of the Securities will correspond to
those on Schedule B. We were not engaged to, and did not perform an examination, the objective of
which is the expression of an opinion on the above information. Accordingly, we do not express
such an opinion. Had we performed additional procedures, other matters might have come to our
attention that would have been reported to you, but such procedures would not necessarily reveal any
material misstatement of the information referred to above.
This letter is solely for the use and information of the addressees and Ginnie Mae’s Financial
Advisor in connection with the issuance of the Securities covered by the Trust Agreement and is not
intended to be and should not be used by anyone other than these specified parties. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose, including but not limited to,
the purchase or sale of the Securities, nor is it to be filed with or referred to in whole or in part in the
Trust Agreement or the Supplement or any other document, except that reference may be made to it
in the Sponsor Agreement or in any list of closing documents pertaining to the issuance of the
Securities.
VI-18-4
Yours truly,
VI-18-5
| File Type | application/pdf |
| File Title | Microsoft Word - 1933239_11.DOC |
| Author | 09314 |
| File Modified | 2008-12-05 |
| File Created | 2008-11-09 |