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seniority until those bonds were fully paid, and then on the same
basis to holders of the most junior classes. The holders
received semiannual interest payments at the stated rate.6 The
holders of CMOs received payments of principal at a rate at least
corresponding to the schedule of minimum payments set forth in
the offering circular or prospectus. The holders received
payments at a faster rate if the principal amount of the
mortgages that served as collateral paid down faster than implied
by the schedule of minimum payments. Petitioner never had to
satisfy any minimum sinking fund obligation (i.e., cover a
deficit between funds received from mortgages and minimum
payments of principal to CMO holders).
H. Guaranteed Mortgage Certificates (GMCs)
GMC A 1975, GMC B 1975, GMC A 1976, GMC B 1976, GMC A 1977,
GMC B 1977, GMC C 1977, GMC A 1978, GMC B 1978, GMC C 1978, GMC A
1979, GMC B 1979, and GMC C 1979 were certificates guaranteed by
petitioner and denominated as representing an interest in a pool
of single-family mortgages held by petitioner as trustee.7
6 In some cases, interest on the most junior class of bonds
was not paid currently but accrued until the senior classes had
been paid in full.
7 Respondent issued to petitioner Priv. Ltr. Rul.
7607233060D (July 23, 1976), which states, in pertinent part:
Although the issuance of [Guaranteed Mortgage]
Certificates takes the form of a transfer to the
Certificate holders by * * * [petitioner] of undivided
(continued...)
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