The purpose of this Multiclass Participants Memorandum is to inform interested participants that, effective for September 2014 transactions, (i) the Final Distribution Date (FDD) for Accretion Directed Classes in Ginnie Mae Multifamily REMIC and MX Transactions (Multifamily Accretion Directed Classes) must be calculated with a new methodology, and (ii) the procedure for the calculation of the FDD in the accountants’ agreed-upon procedures report concerning the Offering Circular for Multifamily transactions in the Ginnie Mae Multiclass Securities Guide (the Guide) is revised. All defined terms used herein and not otherwise defined shall have the meaning set forth in the Guide.
Change in Calculation of Final Distribution Date
Ginnie Mae is requiring Ginnie Mae Multiclass Transaction Participants to use a more conservative methodology to calculate the FDD for Multifamily Accretion Directed Classes in order to reduce the risk of a claim for a Ginnie Mae Guaranty Payment. The new methodology is described in Exhibit A.
In connection with any Ginnie Mae Multiclass Securities transaction, a Sponsor must represent and warrant that, assuming full and timely payments on the Trust Assets (as those assets are identified in the related Offering Circular Supplement), such payments will be sufficient to pay in full each class of securities by the FDD under all possible prepayment scenarios regardless of the rate of prepayment of the Mortgage Loans underlying the assumed Trust Assets or level of any index upon which the Interest Rate of any Class may be based. See Section 4(v) of the Standard Sponsor Provisions (SSPs) incorporated by reference into the related Sponsor Agreement, Section 4.01(d) of the REMIC Standard Trust Provisions incorporated by reference into the related Trust Agreement and Section 5.01(d) of the MX Standard Trust Provisions incorporated by reference into the related MX Trust Agreement. If Ginnie Mae makes a Ginnie Mae Guaranty Payment as a result of the Sponsor’s breach of any its representations, or warranties under the related Sponsor Agreement, the related Trust Agreement or the related MX Trust Agreement, Ginnie Mae has recourse against the Sponsor for all payments made plus interest, as well as indemnification against all costs and expenses related to any Sponsor breach. See Sections 10(a) and (b) of the SSPs.
The requirement to use any particular methodology is no substitution for a Sponsor to employ adequate and sufficient due diligence measures to ensure the accuracy of the representations and warranties made by such Sponsor in the related Sponsor Agreement, the related Trust Agreement and the related MX Trust Agreement. Regardless of the methodology applied, a Sponsor is solely responsible for the sufficiency of the methodology and must promptly notify Ginnie Mae of any scenario under which timely payments on the Trust Assets may be insufficient to pay in full a Class of Securities by its FDD.
Change in Accountants’ Report
The procedure regarding the FDD in the accountants’ agreed-upon procedures report concerning the Offering Circular for Multifamily transactions in the Guide is revised to reflect the new methodology. The new form of the report is attached hereto as Exhibit B.
Please call Shalei Choi in Ginnie Mae’s Office of Capital Markets at (202) 475-7820 with any questions or comments regarding this announcement.