-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K4LlJEu3Il+wkpm2FOXgnEJd/YxkXXmGpK5vWaOTIN7k0YNGC4eQZa40AhMvsitA +/3QUSS//gdY/zVnyKpDXQ== 0000845877-96-000031.txt : 19960620 0000845877-96-000031.hdr.sgml : 19960620 ACCESSION NUMBER: 0000845877-96-000031 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19960619 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL AGRICULTURAL MORTGAGE CORP CENTRAL INDEX KEY: 0000845877 STANDARD INDUSTRIAL CLASSIFICATION: FEDERAL & FEDERALLY-SPONSORED CREDIT AGENCIES [6111] IRS NUMBER: 521578738 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-06325 FILM NUMBER: 96583149 BUSINESS ADDRESS: STREET 1: 919 18TH ST N W STE 200 CITY: WASHINGTON STATE: DC ZIP: 20006 BUSINESS PHONE: 2028727700 MAIL ADDRESS: STREET 1: 919 18TH STREET NW STREET 2: SUITE 200 CITY: WASHINGTON STATE: DC ZIP: 20006 S-3 1 As filed with the Securities and Exchange Commission on June 19, 1996 Registration No. 33- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 FARMER MAC MORTGAGE SECURITIES CORPORATION (Exact name of registrant as specified in its charter) Delaware 52-1779791 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 919 18th Street, N.W. Washington, D.C. 20006 (202) 872-7700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Henry D. Edelman Farmer Mac Mortgage Securities Corporation 919 18th Street, N.W. Washington, D.C. 20006 (202) 872-7700 (Name, address, including zip code and telephone number, including area code, of agent for service) Copies to: John Arnholz Michael T. Bennett Brown & Wood Federal Agricultural Mortgage 815 Connecticut Avenue, N.W. Corporation Suite 701 919 18th Street, N.W. Washington, D.C. 20006 Washington, D.C. 20006 _____________ Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. _____________ If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. [X] CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount Offering Aggregate Amount of Title of Securities Being Price Per Offering Registration Being Registered Registered Unit(1) Price(1) Fee Guaranteed $250,000,000 100% $250,000,000 $86,206.90 Agricultural Mortgage-Backed Securities (Issuable in Series)
(1) Estimated solely for the purpose of calculating the registration fee. _________________________________________ The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus supplement shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. SUBJECT TO COMPLETION, DATED JUNE 19, 1996 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED _____________, 199 ) $____________ (Approximate) Guaranteed Agricultural Mortgage-Backed Securities Guaranteed by Farmer Mac Federal Agricultural Mortgage Corporation Farmer Mac Pool(s) ____ The Guaranteed Agricultural Mortgage-Backed Securities offered hereby (the "Certificates" or the "AMBS Certificates") evidence beneficial ownership interests in Farmer Mac Pool(s) _____ (the "Trust Fund"). Substantially all of the assets of the Trust Fund will consist of [[fixed rate] agricultural real estate mortgage loans ("Qualified Loans")][Farmer Mac Guaranteed Agricultural Mortgage-Backed Securities ("Trust Fund AMBS"), each of which will represent a beneficial interest a Pool of fixed rate agricultural real estate mortgage loans (the "Qualified Loans")]. As described herein, timely payment of interest on the Certificates and the Principal Distribution Amount is guaranteed by the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States ("Farmer Mac"), pursuant to Title VIII of the Farm Credit Act of 1971, as amended. [Farmer Mac will not guarantee the collection from borrowers of any Prepayment Premiums or Yield Maintenance Charges.] See "FARMER MAC GUARANTEE" herein. (continued on next page) THE OBLIGATIONS OF FARMER MAC UNDER ITS GUARANTEE ARE OBLIGATIONS SOLELY OF FARMER MAC AND ARE NOT OBLIGATIONS OF, AND ARE NOT GUARANTEED BY, THE FARM CREDIT ADMINISTRATION, THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES (OTHER THAN FARMER MAC), AND ARE NOT BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES. _________________________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ________________________________ PROSPECTIVE INVESTORS IN THE CERTIFICATES SHOULD CONSIDER THE FACTORS DISCUSSED UNDER "RISK FACTORS" IN THIS PROSPECTUS SUPPLEMENT ON PAGE S-__ AND IN THE PROSPECTUS ON PAGE __.
Original Proceeds to Final Principal Pass-Through Price to Underwriting the Distribution Amount(1) Rate Public Discount Depositor(2) Date(3)
____________________ (1) Subject to a permitted variance of plus or minus 5%. (2) The aggregate proceeds (excluding accrued interest adjustments) from the sale of the Certificates, before deducting expenses estimated to be $___________, are estimated to be approximately $______________. See "METHOD OF DISTRIBUTION" herein. (3) Determined based on the Modeling Assumptions stated under "YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS," assuming, among other things, [no prepayments]. The Certificates are offered subject to receipt and acceptance by the Underwriter, to prior sale and to the Underwriter's right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. It is expected that the Certificates will be available through the book-entry system of the Federal Reserve Banks on or about the "Closing Date"). It is expected that the Certificates in registered certificated form will be available for delivery at the offices of _________________ of ___________ on or about____________________. [Underwriter] The date of this Prospectus Supplement is ________, 199_. Interest will accrue on each Class of the Certificates offered hereby at the respective Pass-Through Rates set forth on the cover hereof. Interest will be distributable on the Certificates offered hereby on each Distribution Date (as defined herein) commencing in _____________, 199 . On each Distribution Date, the amount of interest distributable on each Certificate offered hereby will equal __ days' of interest at the applicable Pass-Through Rate on the Certificate Balance thereof immediately prior to such Distribution Date. Principal of the Certificates offered hereby will be distributable on each Distribution Date to the extent and in the manner described herein. The yields to maturity on the Certificates will be affected, in varying degrees, by the rate and timing of principal payments (including voluntary prepayments and prepayments resulting from liquidated Qualified Loans) on the Qualified Loans, which may be prepaid under the circumstances described herein. Investors in the Certificates offered hereby should consider, in the case of any Certificates purchased at a discount, the risk that a slower than anticipated rate of principal prepayments on the Qualified Loans could result in an extension of the weighted average lives of such Certificates and actual yields to investors that are lower than the anticipated yields and, in the case of any Certificates purchased at a premium, the risk that a faster than anticipated rate of principal prepayments on the Qualified Loans could result in a reduction of the weighted average lives of such Certificates and actual yields to investors that are significantly lower than the anticipated yields. The Certificates offered hereby constitute a [part of a] series of Pass-Through Certificates being offered by the Depositor (as defined herein) from time to time pursuant to its Prospectus dated _____________, 199 of which this Prospectus Supplement is a part. This Prospectus Supplement does not contain complete information about the offering of the Certificates. Additional information is contained in the Prospectus and purchasers are urged to read both this Prospectus Supplement and the Prospectus in full. Sales of the Certificates may not be consummated unless the purchaser has received both this Prospectus Supplement and the Prospectus. There is currently no secondary market for the Certificates. The Underwriter intends to make a market in the Certificates but is not obligated to do so. There can be no assurance that any such market for the Certificates will develop or, if developed, will continue. [An election will be made to treat the Trust Fund as a "real estate mortgage investment conduit" (a "REMIC") for federal income tax purposes. Each Class of Certificates other than the Class R Certificate will be designated as regular interests in the REMIC and will generally be treated as debt instruments for federal income tax purposes. The Class R Certificate will be designated as the residual interests in the REMIC. Prospective investors are cautioned that the Class R Certificateholders' REMIC taxable income and the tax liability thereon may exceed cash distributions to such holders during certain periods, in which event such holders must have sufficient alternative sources of funds to pay such tax liability. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" herein and in the Prospectus.] [As described further herein, the Class R Certificate (the "Residual Certificate") may not be purchased by or transferred by ERISA Plans to (i) a Disqualified Organization or Book-Entry Nominee (as defined in accompanying Prospectus), (ii) except under limited circumstances, a person who is not a U.S. Person (as defined in the accompanying Prospectus), (iii) an ERISA Plan or (iv) any person or entity who the transferor has reason to believe intends to impede the assessment or collection of any federal, state or local taxes legally required to be paid with respect thereto. See "ERISA CONSIDERATIONS" herein.] IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER- ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Until 90 days after the date of this Prospectus Supplement, all dealers effecting transactions in the Certificates, whether or not participating in this distribution, may be required to deliver a Prospectus Supplement and the Prospectus to which it relates. This is in addition to the obligation of dealers to deliver a Prospectus and Prospectus Supplement when acting as underwriters and with respect to their unsold allotments or subscriptions. SUMMARY OF TERMS The following summary is qualified in its entirety by the detailed information appearing elsewhere in this Prospectus Supplement and the Prospectus. Capitalized terms used herein and not otherwise defined have the meanings assigned in the Prospectus. Securities Offered The Guaranteed Agricultural Mortgage-Backed Securities ("AMBS"), Farmer Mac Pool(s)__ (the "Certificates" or the "AMBS Certificates"), in the Classes and aggregate principal amounts set forth on the cover hereto (subject to a permitted variance of plus or minus 5%). The Guarantor The Federal Agricultural Mortgage Corporation ("Farmer Mac") is a federally chartered instrumentality of the United States established by Title VIII of the Farm Credit Act of 1971, as amended (the "Farmer Mac Charter"). See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" in the Prospectus. The Depositor Farmer Mac Mortgage Securities Corporation, a Delaware corporation and wholly owned subsidiary of Farmer Mac, will act as depositor (the "Depos- itor") under the Trust Agreement. See "THE DEPOSITOR" herein. The Guarantee As described herein, the timely payment to Certificateholders of interest on the Certificates and the Principal Distribution Amount (as defined herein) is guaranteed by Farmer Mac. Farmer Mac's obligations under Farmer Mac Guarantee are not backed by the full faith and credit of the United States. See "FARMER MAC GUARANTEE" herein. Not an Obligation of the United States Farmer Mac's obligations under the Farmer Mac Guarantee are not backed by the full faith and credit of the United States. The Master Servicer Farmer Mac will act as Master Servicer (the "Master Servicer") of the Qualified Loans. The Qualified Loans will be directly serviced by ___ ______, a _________, (the "Central Servicer") which will be acting on behalf of Farmer Mac pursuant to a Servicing Contract between it and Farmer Mac. See "DESCRIPTION OF THE AGREEMENTS --Servicing and Other Compensation and Payment of Expenses" herein. The Trustee [Trustee]. The Trust Agreement The Trust Agreement dated ___________, 1996 as supplemented by an Issue Supplement dated the Cut-off Date (collectively, the "Trust Agreement"), each among Farmer Mac, the Depositor and the Trustee. Cut-off Date _____________. Closing Date On or about __________________. Distribution Date The __ day of each month, or if such day is not a Business Day, the next succeeding Business Day, beginning ____________. Distributions on Interest. Interest will accrue on each Class of the Certificates Certificates offered hereby at the respective Pass-Through Rate set forth on the cover hereof during each [__-month period ending on the last day of the month preceding the month in which a Distribution Date occurs] (each, an "Interest Accrual Period"). On each Distribution Date, interest will be distributable on each Class in an aggregate amount equal to the Accrued Certificate Interest for such Class and Distribution Date. The "Accrued Certificate Interest" for any Distribution Date and Class will equal the interest accrued at the applicable Pass-Through Rate during the related Interest Accrual Period on the Certificate Balance thereof immediately prior to such Distribution Date. See "DESCRIPTION OF THE CERTIFICATES--Distributions--Interest" herein. Principal. Principal will be distributed [quarterly, semiannually, annually] on each Class of Certificates on each Distribution Date in an aggregate amount equal to the Principal Distribution Amount for such Distribution Date. See "DESCRIPTION OF THE CERTIFICATES-- Distributions--Principal" herein. Premiums. The amount of any Prepayment Premium or Yield Maintenance Charge (as each term is defined herein) to the extent collected by the Central Servicer will be distributed to the [ ] Certificates on each Distribution Date in the manner described herein. See "DISTRIBUTION OF THE CERTIFICATES -- Distributions -- Premiums" herein. Record Date The Record Date of each Distribution Date will be the close of business on the Business Day of the month immediately preceding the month in which such Distribution Date occurs. The Trust Fund Each Certificate represents a beneficial ownership interest in the Trust Fund. The Trust Fund corpus consists of: (i) [[fixed rate] agricultural real estate mortgage loans (collectively, the "Qualified Loans" )] [Farmer Mac Guaranteed Agricultural Mortgage- Backed Securities ("Trust Fund AMBS"), each of which will represent a beneficial interest a Pool of fixed rate agricultural real estate mortgage loans (the "Qualified Loans")], (ii) the Farmer Mac Guarantee and (iii) the Collection Account and Certificate Account(each as defined herein). See "DESCRIPTION OF THE QUALIFIED LOANS" herein. Advances The Central Servicer will be obligated to advance delinquent installments of principal and interest on Qualified Loans to the extent described herein. See "DESCRIPTION OF THE CERTIFICATES--Advances" herein. Central Servicing Fee Rate [TO COME] Guarantee Fee Rate [TO COME] [Optional Termination On any Distribution Date when the aggregate [principal balance] of the Certificates is less than __ % thereof as of the Cut-off Date, the Central Servicer may purchase from the Trust Fund all remaining Qualified Loans [AMBS] held by the Trust Fund and thereby effect an early retirement of the Certificates. See "DESCRIPTION OF CERTIFICATES, Termination" herein and in the Prospectus.] Certain Federal Income [An election will be made to treat the Trust Tax Consequences Fund as a real estate mortgage investment conduit (the "REMIC") for federal income tax purposes. The Certificates will be designated as the regular interests in the REMIC and generally will be treated as newly originated debt instruments for federal income tax purposes. The Class R Certificate will be designated as the residual interest in the REMIC. Beneficial owners of the Certificates will be required to report income on such Certificates in accordance with the accrual method of accounting. [The Class __ Certificates will be issued without original issue discount for federal income tax purposes.] [It is anticipated that the Class ___ Certificates will be issued with original issue discount in an amount equal to the excess of the initial principal balances thereof over its issue price (including accrued interest) for federal income tax purposes.] [It is anticipated that the Class ___ Certificates will be issued with de minimis original issue discount for federal income tax purposes.] [It is anticipated that the Class___Certificates will be issued at a premium for federal income tax purposes.] See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" herein and in the Prospectus. ERISA Considerations The acquisition of a Certificate by a plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any individual retirement account ("IRA") or any other plan subject to Code Section 4975 could, in some instances, result in a prohibited transaction or other violations of the fiduciary responsibility provisions of ERISA and Code Section 4975. [Discussion of exemptions]. See "ERISA CONSIDERATIONS" herein and in the Prospectus. Legal Investment The Certificates will constitute securities guaranteed by Farmer Mac for purposes of the Farmer Mac Charter and, as such, will, by statute, be legal investments for certain types of institutional investors to the extent that those investors are authorized under any applicable law to purchase, hold, or invest in obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality of the United States. Investors whose investment authority is subject to legal restrictions should consult their own legal advisors to determine whether and to what extent specific Classes of the Certificates constitute legal investments for them. See "LEGAL INVESTMENT" herein and in the Prospectus.
DESCRIPTION OF THE CERTIFICATES GENERAL The Certificates will be issued pursuant to a Trust Agreement to be dated _______, 1996 as supplemented by an Issue Supplement dated the Cut-off Date (collectively, the "Trust Agreement"), each among Farmer Mac, the Depositor and the Trustee. Reference is made to the Prospectus for important additional information regarding the terms and conditions of the Trust Agreement and the Certificates. The Certificates will be issued in the ______ Classes offered hereby[, together with the _______ Certificates, none of which are offered hereby], and in the aggregate original Certificate Balance of approximately $____________ (subject to a permitted variance of plus or minus 5%). Any such variance will be allocated so as to approximate the material characteristics of the Classes of Certificates described herein. As described below, each Class of Certificates offered hereby, [other than the Class R Certificate (the "Residual Certificate"),] will be issued in book-entry form, and beneficial interests therein will be held by investors through the book- entry [system of the Federal Reserve Banks], in minimum denominations in the Certificate Balance of $___________ and integral multiples of $___________ in excess thereof. [The Residual Certificate will be issued in certificated form as a single Certificate representing the entire Certificate Balance thereof.] Notwithstanding the minimum denominations of the Certificates described herein, one Certificate of each Class [other than the Residual Certificate] may evidence an additional amount equal to the remaining Certificate Balance thereof. BOOK-ENTRY CERTIFICATES [Each Class of the Certificates offered hereby [other than the Residual Certificate] (collectively, the "Book-Entry Certificates") will be issued and maintained and may be transferred by Certificateholders only on the book-entry system of the Federal Reserve Banks. Such entities whose names appear on the book-entry records of a Federal Reserve Bank as the entities for whose accounts such Certificates have been deposited are herein referred to as "Certificateholders" or "Holders." A Holder is not necessarily the beneficial owner of a Book-Entry Certificate. beneficial owners will ordinarily hold Book-Entry Certificates through one or more financial intermediaries, such as banks, brokerage firms and securities clearing organizations. See "DESCRIPTION OF THE CERTIFICATES-The Fed System" in the Prospectus.] Issuance of the Book-Entry Certificates in book-entry form may reduce the liquidity of such Certificates in the secondary market since certain potential investors may be unwilling to purchase Certificates for which they cannot obtain physical certificates. See "RISK FACTORS,Limited Liquidity" in the Prospectus. NON-BOOK-ENTRY CERTIFICATES The [Residual Certificate] (the "Non-Book-Entry Certificates") will be issued in fully-registered, certificated form. The Non-Book-Entry Certificates will be transferable and exchangeable on a Certificate Register to be maintained at the corporate trust office in the city in which the Trustee is located or such other office or agency maintained for such purposes by the Trustee in New York City. Under the Trust Agreement, the Trustee will initially be appointed as the Certificate Registrar. No service charge will be made for any registration of transfer or exchange of the Non-Book-Entry Certificates, but payment of a sum sufficient to cover any tax or other governmental charge may be required by the Trustee. [The Residual Certificate will be subject to certain restrictions on transfer. See "Restrictions on Transfer of the Residual Certificate" below.] Distributions of principal and interest, if any, on each Distribution Date on the Non-Book-Entry Certificates will be made to the persons in whose names such Certificates are registered at the close of business on the last business day of the month immediately preceding the month of such Distribution Date. Distributions will be made by check or money order mailed to the person entitled thereto at the address appearing in the Certificate Register, or, upon written request by the Certificateholder to the Trustee, by wire transfer to a United States depository institution designated by such Certificateholder and acceptable to the Trustee or by such other means of payment as such Certificateholder and the Trustee may agree; provided, however, that the final distribution in retirement of the Non-Book-Entry Certificates will be made only upon presentation and surrender of such Certificates at the office or agency of the Trustee specified in the notice to the holders thereof of such final distribution. DISTRIBUTIONS General. Distributions of principal and interest on the Certificates will be made on the ___ day of each month, or, if any such day is not a Business Day (that is, a day other than Saturday, Sunday or a day in which banking institutions in New York or __________ are authorized or obligated by law to be closed), the next succeeding Business Day (each, a "Distribution Date") to persons in whose names the Certificates are registered at the close of business on the last Business Day of the month preceding the month in which the Distribution Date occurs (the "Record Date"). Interest. Interest on each Class of Certificates will be paid [quarterly, semi-annually, annually] on each Distribution Date in an aggregate amount equal to the Accrued Certificate Interest for each Class and Distribution Date. With respect to each Class of Certificates, "Accrued Certificate Interest" will be equal to interest accrued during the calendar month immediately preceding such Distribution Date (each, an "Interest Accrual Period") at the Pass-Through Rate for such Class set forth on the cover hereof on the Certificate Balance thereof immediately prior to such Distribution Date. Interest on the Certificates will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Principal. Principal will be distributable [quarterly, semi- annually, annually] on each Distribution Date in an aggregate amount equal to the Principal Distribution Amount for such Distribution Date. On each Distribution Date, the "Principal Distribution Amount" will equal the [sum of (i) the principal portion of all scheduled monthly payments (including any scheduled Balloon Payments) on the Qualified Loans due during the related Due Period, (ii) the Scheduled Principal Balance of each Qualified Loan which was repurchased or became a Liquidated Qualified Loan during the related due period, and (iii) all full or partial principal prepayments received during the related prepayment period (as defined herein)][amounts of any distributions received in respect of principal on the AMBS]. [Description of Prepayment Period - transaction specific] [Definition of Scheduled Principal Balance - transaction specific] [Definition of Due Period - transaction specific] On each Distribution Date, the Principal Distribution Amount will be distributed in the following order of priority among the Certificates: [Transaction Specific] [Premiums. In the event a Borrower is required to pay a Yield Maintenance Charge or any Prepayment Premium, to the extent such payments are collected, the Master Servicer will distribute such payments in the following manner: [transaction specific]. The distribution of any Prepayment Premium or Yield Maintenance Charge to Certificateholders will not reduce the Certificate Balance of the related Class of Certificates. Farmer Mac will not guarantee the collection from any borrower of any Yield Maintenance Charge or Prepayment Premium unless such amounts are actually collected by the Central Servicer. See "FARMER MAC GUARANTEE" herein.] ADVANCES On or prior to each Certificate Account Deposit Date (as defined herein), the Central Servicer will be required to advance its own funds in an amount equal to the aggregate of principal payments and interest (net of Servicing Fees) that were due on the Qualified Loans during the related Due Period and were delinquent on such Certificate Account Deposit Date (each such payment, an "Advance"), subject to the Central Servicer's good faith determination that such advances are recoverable from related late collections or liquidation proceeds thereof. Because Farmer Mac guarantees timely distributions of interest on the Certificates and the Principal Distribution Amount to Holders, the failure of the Central Servicer to make any Advance will not affect distributions of interest and principal to such Holders. [Additional Rights of Residual Certificateholders In addition to distribution of principal and interest, the holder of the Residual Certificate will be entitled to receive (i) any amounts remaining in the Certificate Account on any Distribution Date after distribution of principal and interest are made on Certificates on such date and (ii) the proceeds, if any, of the assets of the Trust Fund after the Certificate Balance of all the Classes of Certificates have been reduced to zero. It is not anticipated that any material assets will be remaining for such distribution at any such time.] [Transfer Restrictions of the Residual Certificate] FARMER MAC GUARANTEE Pursuant to the Trust Agreement, Farmer Mac will guarantee (the "Farmer Mac Guarantee") the timely distribution of interest accrued on the Certificates and the distribution of the full Principal Distribution Amount (including any Balloon Payments) for the related Distribution Date. In addition, Farmer Mac is obligated to distribute on a timely basis the principal balance of each Class of Certificates in full no later than the related Final Distribution Date, whether or not sufficient funds are available in the Certificate Account. The Farmer Mac Guarantee will not cover the timely payment of any uncollected Prepayment Premiums or Yield Maintenance Charges. See "RISK FACTORS" herein. Farmer Mac's obligations under the Farmer Mac Guarantee are obligations solely of Farmer Mac and are not backed by the full faith and credit of the United States. Furthermore, Farmer Mac anticipates that its future contingent liabilities in respect of guarantees of outstanding securities backed by agricultural mortgage loans will greatly exceed its resources, including its limited ability to borrow from the United States Treasury. See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" in the Prospectus. OUTSTANDING GUARANTEES As of _____________, Farmer Mac had outstanding guarantees on approximately $__________ aggregate principal amount of Farmer Mac Securities. The Act authorizes Farmer Mac to borrow up to $1,500,000,000 from the Secretary of the Treasury, subject to certain conditions, to enable Farmer Mac to fulfill its guarantee obligations. See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" in the Prospectus. As of ________ , the amount of all outstanding borrowings by Farmer Mac from the Secretary of the Treasury totalled $_______________, leaving $____________ remaining thereunder. YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS The rate of payment of principal on the Certificates and the yield to maturity of the Certificates will be directly related to the rate of payments of principal on the [underlying] Qualified Loans. The rate of payments of principal of the Qualified Loans will in turn be affected by the rate of principal prepayments thereon by borrowers, by liquidations of defaulted Qualified Loans repurchased as a result of defective documentation, breaches of representations and warranties or for certain other reasons. There is little or no historical data available to provide assistance in estimating the rate of prepayments and defaults on Agricultural Real Estate generally or the Qualified Loans particularly. In the case of Agricultural Real Estate Loans, a number of social, economic, political, trade, geographic, climatic, demographic, legal and other factors may influence prepayments and defaults, including the age of the Qualified Loans, the geographic distribution of the Mortgaged Properties, the payment terms of the Qualified Loans, the characteristics of the borrowers, weather, economic conditions generally and in the geographic area in which the Mortgaged Properties are located, enforceability of due-on-sale clauses, servicing decisions, the availability of mortgage funds, the extent of the borrowers' net equity in the Mortgaged Properties, mortgage market interest rates in relation to the effective interest rates on the Qualified Loans and other unforeseeable variables, both domestic and international, affecting particular commodity groups and the farming industry in general. Generally, if prevailing interest rates fall significantly below the interest rates on the Qualified Loans, the Qualified Loans are likely to be subject to higher prepayments than if prevailing rates remain at or above the interest rates on such Qualified Loans. Conversely, if prevailing interest rates rise above the interest rates on the Qualified Loans, the rate of prepayment would be expected to decrease. There can be no certainty as to the rate or prepayments on the Qualified Loans during any period or over the lives of the Certificates. The rate of default on the Qualified Loans will also affect the rate of payment of principal on the Qualified Loans. Prepayments, liquidations and repurchases of the Qualified Loans will result in distributions to holders of the Certificates of amounts which would otherwise be distributed over the remaining terms of the Qualified Loans. [Virtually all] of the Qualified Loans contain lock-out periods in which prepayments are prohibited or impose prepayment penalties or charges and/or other restrictions on prepayments. [Although some of the lockout periods have expired,] most of the Qualified Loans continue to be subject to prepayment penalties and other restrictions on prepayments that, if enforced by the Central Servicer, could be a deterrent to prepayments. In the normal course of its business, the Central Servicer generally enforces such prepayment penalties and restrictions unless the enforcement thereof is deemed by the Central Servicer to be inappropriate.] [ ] of the Qualified Loans require the payment of a Yield Maintenance Charge or Prepayment Premium in connection with the prepayment of the related Qualified Loan. Because Farmer Mac does not guarantee the collection of any Yield Maintenance Charges or Prepayment Premiums on the underlying Qualified Loans, the expected yield to investors in the Certificates may be sensitive in varying degrees to the extent such amounts are not collected. In addition the required payment of Prepayment Premiums or Yield Maintenance Charges may not be a sufficient disincentive to prevent the voluntary prepayment of the Qualified Loans and, even if collected, allocation thereof to any Class may be insufficient to offset fully the adverse effects on the anticipated yield thereon arising out of the corresponding principal payment. [In addition, a [substantial portion] of the Qualified Loans include "due-on-sale" clauses; however, it is generally the policy of the Central Servicer not to enforce such clauses unless the related obligor assuming such Qualified Loan does not meet the Underwriting Standards of Farmer Mac. The Servicing Contract (as defined herein) does not require any such enforcement. The remaining Qualified Loans are assumable by persons meeting the Underwriting Standards of Farmer Mac. In addition, at the request of the borrower, the Central Servicer may allow the partial release of a Mortgaged Property provided the collateral property is reappraised and a partial prepayment is made such that the resulting loan-to-value ratio is no greater than the loan-to-value ratio as of the Cut-off Date and the cash flows from the remaining property are sufficient to service the remaining debt. Such partial release will be treated as a prepayment in part and the related Qualified Loan will remain in the Trust.] The yield to investors in the Certificates will be sensitive in varying degrees to the rate and timing of principal payments (including prepayments) of the Qualified Loans, which generally can be prepaid at any time, subject to the restrictions and prepayment penalties described above. In addition, the yield to maturity on a Certificate may vary depending on the extent to which such Certificate is purchased at a discount or premium. Holders of the Certificates should consider, in the case of any Certificates purchased at a discount, the risk that a slower than anticipated rate of principal payments could result in an actual yield that is lower than the anticipated yield and, in the case of any Certificates purchased at a premium, the risk that a faster than anticipated rate of principal payments could result in an actual yield that is lower than the anticipated yield. The timing of changes in the rate of prepayments on the Qualified Loans may significantly affect an investor's actual yield to maturity, even if the average rate of principal payments is consistent with an investor's expectation. In general, the earlier a prepayment of principal of the related Qualified Loans, the greater the effect on an investor's yield to maturity. The effect on an investor's yield of principal payments occurring at a rate higher (or lower) than the rate anticipated by the investor during the period immediately following the issuance of the Certificates may not be offset by a subsequent like decrease (or increase) in the rate of principal payments. An investor must make an independent decision as to the appropriate prepayment scenario to be used in deciding whether to purchase the Certificates. Investors should consider the risk that rapid rates of prepayments on the Qualified Loans, and therefore of principal payments on the Certificates, may coincide with periods of low prevailing interest rates. During such periods, the effective interest rates on securities in which an investor may choose to reinvest amounts received as principal payments on such investor's Certificate may be lower than the applicable Pass- Through Rate. Conversely, slow rates of prepayments on the Qualified Loans, and therefore of principal payments on the Certificates, may coincide with periods of high prevailing interest rates. During such periods, the amount of principal payments available to an investor for reinvestment at such high prevailing interest rates may be relatively low. [The effective yield to the holders of the Certificates will be lower than the yield otherwise produced by the applicable purchase price and Pass-Through Rate because the distributions of principal, if any, and interest will not be payable to such holders until the [__]th day of the month following the period in which interest accrues (without any additional distribution of interest or earnings thereon in respect of such delay).] Weighted Average Lives of the Certificates "Weighted average life" refers to the average amount of time from the date of issuance of a security until each dollar of principal of such security will be repaid to the investor. The weighted average lives of the Certificates will be influenced by the rate at which principal payments (including prepayments) on the Qualified Loans are made. Principal payments on the Qualified Loans may be in the form of scheduled amortization or prepayments (for this purpose, the term "prepayment" includes prepayments and liquidations due to a default or other dispositions of the Qualified Loans). Prepayments on mortgage loans are commonly measured by a prepayment standard or model. The model used in this Prospectus Supplement (the "Prepayment Model" or "CPR") represents an assumed constant rate of prepayments, expressed as an annual percentage rate, relative to the then outstanding principal balance of a pool of mortgage loans for the life of such mortgage loans. The tables set forth below have been based on the assumptions, among others, that (i) [TO COME] (collectively, the "Modeling Assumptions"). There may be discrepancies between the characteristics of the actual Qualified Loans included in the Pool and those of the Qualified Loans in the Pool as constituted for purposes of the Modeling Assumptions. Any such discrepancies may have an effect upon the percentages of the original Certificate Balances outstanding and the weighted average lives of the Certificates set forth in the tables. There can be no assurance as to how or whether any such discrepancies may affect the rate of prepayments of the Qualified Loans. In addition, to the extent that the actual Qualified Loans included in the Pool have characteristics which differ from those assumed in preparing the tables set forth below, each such Certificate may mature earlier or later than indicated by the tables. Based on the foregoing assumptions, the tables indicate the weighted average lives of the Certificates and set forth the percentages of the original Certificate Balance of each such Certificate that would be outstanding after each of the Distribution Dates indicated, at various CPR percentages. Neither CPR nor any other prepayment model or assumption purports to be a historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of mortgage loans, including the Qualified Loans included in the Pool. Variations in the actual prepayment experience and the balance of the Qualified Loans that prepay may increase or decrease the percentage of the original Certificate Balances (and weighted average lives) shown in the following tables. Such variations may occur even if the average prepayment experience of all such Qualified Loans equals any of the specified CPR percentages. [WEIGHTED AVERAGE LIFE TABLES] DESCRIPTION OF THE AGREEMENTS The Certificates will be issued pursuant to the Trust Agreement. Farmer Mac will act as Master Servicer (the "Master Servicer") of the Qualified Loans. The Qualified Loans will be directly serviced by ________, a _________, (the "Central Servicer") that will be acting on behalf of Farmer Mac pursuant to a Servicing Contract between it and Farmer Mac (the "Servicing Contract"). In addition, each Seller of Qualified Loans to the Depositor will transfer and assign such Qualified Loans to the Depositor pursuant to a separate Loan Sale Agreement (each, a "Sale Agreement"). Each such Sale Agreement will include certain representations and warranties of the Seller respecting the related Qualified Loans which representations and warranties and the remedies for their breach will be assigned by the Depositor to the Trustee for the benefit of Certificateholders pursuant to the Trust Agreement. Trustee The Trustee for the Certificates will be __________ [a national banking association organized and existing under the federal laws of the United States] with an office at ____________. Servicing and Other Compensation and Payment of Expenses The Central Servicer will receive an amount (the "Central Servicing Fee"), calculated on a Qualified Loan-by-Qualified Loan basis, equal to the product of the outstanding principal balance of a Qualified Loan in any given month and one-twelfth of ____%. Additional servicing compensation in the form of assumption fees or late payment charges will be retained by the Central Servicer. The Depositor, the Master Servicer and the Central Servicer are obligated to pay all expenses incurred in connection with their respective responsibilities under the Trust Agreement and the Servicing Contract (subject to reimbursement for liquidation expenses), including the fees of the Trustee, and also including, without limitation, the various other items of expense enumerated in the Prospectus. See "DESCRIPTION OF THE CERTIFICATES" in the Prospectus. [Guarantee Fee Rate] [Termination The Central Servicer may effect an early termination of the Trust Fund on any Distribution Date after the date on which the aggregate principal balance of the Certificates is reduced to less than ____% thereof as of the Cut-off Date by repurchasing all the Qualified Loans [AMBS] at a price equal to 100% of the principal balance of the Qualified Loans [AMBS] plus accrued interest thereon at the applicable Mortgage Interest Rate [Pass- Through Rate] to the next due date; determined as provided in the Trust Agreement. The Master Servicer will distribute the proceeds thereof to Certificateholders on the final Distribution Date. See "DESCRIPTION OF CERTIFICATES,Termination" in the Prospectus.] [Sale Agreement and Servicing Contract Summary To Come] THE DEPOSITOR Farmer Mac Mortgage Securities Corp., the Depositor, is a wholly-owned subsidiary of Farmer Mac and was incorporated in the State of Delaware in May 1992. The principal executive offices of the Depositor are located at 919 18th Street, N.W., Washington, D.C. 20006. CERTAIN FEDERAL INCOME TAX CONSEQUENCES [TO COME] ERISA CONSIDERATIONS The acquisition of Certificates by a plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any individual retirement account ("IRA") or any other plan subject to Code Section 4975 could, in some instances, result in a prohibited transaction or other violations of the fiduciary responsibility provisions of ERISA and Code Section 4975. Certain exemptions from the prohibited transaction rules could, however, be applicable. [Discussion of exemptions]. See "ERISA CONSIDERATIONS" in the Prospectus. LEGAL INVESTMENT The Certificates will constitute securities guaranteed by Farmer Mac for purposes of the Act and, as such, will, by statute, be legal investments for certain types of institutional investors to the extent that those investors are authorized under any applicable law to purchase, hold, or invest in obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality of the United States. Investors whose investment authority is subject to legal restrictions should consult their own legal advisors to determine whether and to what extent specific Classes of the Certificates constitute legal investments for them. METHOD OF DISTRIBUTION [Subject to the terms and conditions set forth in the Underwriting Agreement among the Depositor, Farmer Mac and [Underwriter] (the "Underwriter"), the Depositor has agreed to sell to the Underwriter and the Underwriter has agreed to purchase the entire aggregate principal amount of the Certificates. The Underwriting Agreement provides that the obligation of the Underwriter is subject to certain conditions precedent and that the Underwriter will be obligated to purchase all of the Certificates if any are purchased. The Underwriter proposes to offer each Class of Certificates in whole or in part to purchasers at the initial public offering prices set forth on the cover page of this Prospectus Supplement, or in part to certain securities dealers at such prices less a concession of ____% for each such Class. After the Certificates are released for sale to the public, the offering prices and other selling terms may from time to time be varied by the Underwriter. The Underwriting Agreement provides that Farmer Mac and the Depositor will indemnify the Underwriter against certain civil liabilities under the 1933 Act or contribute to payments the Underwriter may be required to make in respect thereof.] INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The consolidated financial statements of Farmer Mac for the year ended December 31, 1995 included as an exhibit to its Annual Report on Form 10-K for the year ended December 31, 1995, and the unaudited financial statements of Farmer Mac for the three month period ended March 31, 1996 included as an exhibit to its Quarterly Report on Form 10-Q for the period ended March 31, 1996, each of which has been filed with the Commission by Farmer Mac, are hereby incorporated by reference in this Prospectus Supplement. All financial statements of Farmer Mac included in included in documents filed by Farmer Mac pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus Supplement and prior to the termination of the offering of the Certificates shall be deemed to be incorporated by reference into this Prospectus Supplement and to be a part hereof. EXPERTS The consolidated balance sheets of Farmer Mac as of December 31, 1995 and 1994 and related consolidated statements of operations and cash flows for each of the years in the three-year period ended December 31, 1995, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP, covering December 31, 1995 financial statements contains an explanatory paragraph regarding regulatory capital as described in Note 3 to such financial statements. LEGAL MATTERS Certain legal matters relating to the Certificates will be passed upon for the Depositor by the General Counsel of Farmer Mac and by Brown & Wood, Washington, D.C. and for the Underwriter by ____________________ . Brown & Wood has also acted as special tax counsel to the Trust Fund. INDEX OF PRINCIPAL TERMS Unless the context indicates otherwise, the following terms shall have the meanings set forth on the pages indicated below: Accrued Certificate Interest..............................S-5, S-13 Advance....................................................... S-14 Agricultural Real Estate...................................... S-9 AMBS.......................................................... S-4 AMBS Certificates....................................... cover, S-4 Balloon Payment............................................... S-10 Book-Entry Certificate.........................................S-12 CPR........................................................... S-17 Central Servicer......................................... S-4, S-18 Central Servicing Fee.................................... S-5, S-18 Certificate Account............................................ S-5 Certificate Account Deposit Date.............................. S-14 Certificates............................................ cover, S-4 Certificateholders............................................ S-12 Closing Date..................................................cover Collection Account............................................. S-6 Depositor...................................................... S-4 Distribution Date............................................. S-13 Due Period.................................................... S-13 ERISA.................................................... S-7, S-19 Farmer Mac...............................................cover, S-4 Farmer Mac Charter............................................ S-4 Farmer Mac Guarantee.......................................... S-14 Holders........................................................S-12 IRA...................................................... S-7, S-19 Interest Accrual Period.................................. S-5, S-13 Master Servicer.......................................... S-4, S-18 Modeling Assumptions........................................ S-17 Mortgage Interest Rate........................................ S-10 Mortgaged Properties.......................................... S-9 Non-Book-Entry Certificates................................... S-12 Prepayment.................................................... S-17 Prepayment Model.............................................. S-17 Prepayment Premium............................................ S-9 Principal Distribution Amount................................. S-13 Pool......................................................... S-9 Qualified Balloon Loan....................................... S-10 Qualified Loan......................................cover, S-6, S-9 Record Date................................................... S-13 REMIC......................................................S-2, S-7 Residual Certificate......................................S-2, S-12 Sale Agreement............................................... S-18 Servicing Contract........................................... S-18 Trust Agreement.......................................... S-5, S-12 Trust Fund...............................................cover, S-3 Trust Fund AMBS.................................... cover, S-6, S-9 Trustee....................................................... S-3 Underwriter................................................... S-19 Underwriting Standards......................................... S-9 Weighted average life......................................... S-17 Yield Maintenance Charge........................................S-9 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. [Agricultural Loan Prospectus] SUBJECT TO COMPLETION, DATED JUNE 19, 1996 PROSPECTUS Guaranteed Agricultural Mortgage-Backed Securities ("AMBS") (Issuable in Series) Federal Agricultural Mortgage Corporation Guarantor Farmer Mac Mortgage Securities Corporation Depositor ________ The Certificates offered hereby and by Supplements to this Prospectus (the "Certificates") will be offered from time to time in one or more series (each, a "Series"). Each Series of Certificates will represent in the aggregate the entire beneficial ownership interest in a trust fund (with respect to any Series, the "Trust Fund") consisting of one or more segregated pools (each, a "Pool") of various types of agricultural real estate mortgage loans (the "Qualified Loans"), the portions of loans guaranteed by the United States Secretary of Agriculture (the "Guaranteed Portions"), Trust Fund AMBS (as defined herein), mortgage pass-through certificates or other mortgage-backed securities evidencing interests in or secured by Qualified Loans or Guaranteed Portions (collectively, the "QMBS") or a combination of Guaranteed Portions and/or QMBS (with respect to any Series, collectively, the "Qualified Assets"). Each Certificate will be covered by a guarantee (the "Farmer Mac Guarantee") of the timely payment of required distributions of interest and principal of the Federal Agricultural Mortgage Corporation ("Farmer Mac"), a federally chartered instrumentality of the United States, as described herein and in the related Prospectus Supplement. See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" herein. (Continued on next page) ________ THE OBLIGATIONS OF FARMER MAC UNDER ITS GUARANTEE ARE OBLIGATIONS SOLELY OF FARMER MAC AND ARE NOT OBLIGATIONS OF, AND ARE NOT GUARANTEED BY, THE FARM CREDIT ADMINISTRATION, THE UNITED STATES OR ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES (OTHER THAN FARMER MAC), AND ARE NOT BACKED BY THE FULL FAITH AND CREDIT OF THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR THE RELATED PROSPECTUS SUPPLEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ________ Prospective investors should review the information appearing on page 13 herein under the caption "RISK FACTORS" and such information as may be set forth under the caption "RISK FACTORS" in the related Prospectus Supplement before purchasing any Certificate. Prior to issuance there will have been no market for the Certificates of any Series and there can be no assurance that a secondary market for any Certificates will develop or that, if it does develop, it will continue. This Prospectus may not be used to consummate sales of the Certificates of any Series unless accompanied by the Prospectus Supplement for such Series. Farmer Mac will publish and regularly update infromation regarding the Pools and related Qualified Loans. See "AVAILABLE INFORMATION" herein. Offers of the Certificates may be made through one or more different methods, including offerings through underwriters, as more fully described under "METHOD OF DISTRIBUTION" herein and in the related Prospectus Supplement. ____________, 199 Each Series of Certificates will consist of one or more classes of Certificates (each, a "Class") that may (i) provide for the accrual of interest thereon based on fixed, variable or floating rates; (ii) be entitled to principal distributions, with disproportionately low, nominal or no interest distributions; (iii) be entitled to interest distributions, with disproportionately low, nominal or no principal distributions; (iv) provide for distributions of accrued interest thereon commencing only following the occurrence of certain events, such as the retirement of one or more other Classes of Certificates of such Series; (v) provide for distributions of principal sequentially, based on specified payment schedules or other methodologies; (vi) provide for distributions based on a combination of two or more components thereof with one or more of the characteristics described in this paragraph, to the extent of available funds; and/or (vii) be entitled to distributions of any Prepayment Premiums and Yield Maintenance Charges (each term as defined herein), to the extent collected, in each case as described in the related Prospectus Supplement. See "DESCRIPTION OF THE CERTIFICATES" herein and in the related Prospectus Supplement. Principal and interest with respect to Certificates will be distributable quarterly, semi-annually or annually or at such other intervals and on the dates specified in the related Prospectus Supplement. Distributions on the Certificates of any Series will be made only from the assets of the related Trust Fund, including, without limitation, the related Farmer Mac Guarantee. The Certificates of each Series will not represent an obligation of or interest in the Depositor, any Originator, any Seller, any Central Servicer or any of their respective affiliates, except to the limited extent described herein and in the related Prospectus Supplement. Other than the Farmer Mac Guarantee, neither the Certificates nor any assets in the related Trust Fund (other than Guaranteed Portions) will be guaranteed or insured by any governmental agency or instrumentality or by any other person. The Qualified Assets in each Trust Fund will be held in trust for the benefit of the holders of the related Series of Certificates pursuant to a Trust Agreement, as more fully described herein. The yield on each Class of Certificates of a Series will be affected by, among other things, the rate of payment of principal (including prepayments, repurchases and defaults) on the Qualified Assets in the related Trust Fund and the timing of receipt of such payments as described under the caption "YIELD CONSIDERATIONS" herein and "YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS" in the related Prospectus Supplement. A Trust Fund may be subject to early termination under the circumstances described herein and in the related Prospectus Supplement. If so provided in the related Prospectus Supplement, one or more elections may be made to treat the related Trust Fund or a designated portion thereof as a real estate mortgage investment conduit or "REMIC" for federal income tax purposes. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" herein and in the related Prospectus Supplement. Until 90 days after the date of each Prospectus Supplement, all dealers effecting transactions in the Certificates covered by such Prospectus Supplement, whether or not participating in the distribution thereof, may be required to deliver such Prospectus Supplement and this Prospectus. This is in addition to the obligation of dealers to deliver a Prospectus and Prospectus Supplement when acting as underwriters and with respect to their unsold allotments or subscriptions. PROSPECTUS SUPPLEMENT As more particularly described herein, the Prospectus Supplement relating to the Certificates of each Series will, among other things, set forth with respect to such Certificates, as appropriate: (i) a description of the Class or Classes of Certificates, the payment provisions with respect to each such Class and the Pass-Through Rate or method of determining the Pass-Through Rate with respect to each such Class; (ii) the aggregate principal amount and distribution dates relating to such Series and, if applicable, the initial and final scheduled distribution dates for each Class; (iii) information as to the assets comprising the Trust Fund, including the general characteristics of the assets included therein, including the Qualified Assets (with respect to the Certificates of any Series, the "Trust Assets"); (iv) the circumstances, if any, under which the Trust Fund may be subject to early termination; (v) additional information with respect to the method of distribution of such Certificates; (vi) whether one or more REMIC elections will be made and designation of the regular interests and residual interests; (vii) information as to the terms of the Farmer Mac Guarantee of the Certificates; (viii) whether such Certificates will be initially issued in definitive or book-entry form; and (ix) whether and to what extent, if any, the Farmer Mac Guarantee will cover the timely payment of the related Balloon Payment on any Qualified Balloon Loan. AVAILABLE INFORMATION The Depositor has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement (of which this Prospectus forms a part) under the Securities Act of 1933, as amended, with respect to the Certificates. The Depositor intends to establish a trust and cause it to issue a Series of Certificates as soon as practicable after the Registration Statement is declared effective. This Prospectus and the Prospectus Supplement relating to each Series of Certificates contain summaries of the material terms of the documents referred to herein and therein, but do not contain all of the information set forth in the Registration Statement pursuant to the rules and regulations of the Commission. For further information, reference is made to such Registration Statement and the exhibits thereto. Such Registration Statement and exhibits can be inspected and copied at prescribed rates at the public reference facilities maintained by the Commission at its Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional Offices located as follows: Chicago Regional Office, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade Center, New York, New York 10048. The Depositor will mail or caused to be mailed to holders of Definitive Certificates (as defined herein) of each Series periodic unaudited reports concerning the related Trust Fund. Unless and until Definitive Certificates are issued such reports will be sent on behalf of the related Trust Fund to the office identified for such purpose in the related Prospectus Supplement. Such reports may be available to Beneficial Owners (as defined herein) of the Certificates upon request to their respective Direct Participants or Indirect Participants (as defined herein). See "DESCRIPTION OF THE CERTIFICATES -- Reports to Certificateholders" and "DESCRIPTION OF THE AGREEMENTS -- Evidence as to Compliance" herein. The Depositor will file or cause to be filed with the Commission such periodic reports with respect to each Trust Fund as are required under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder. The Depositor intends to make a written request to the staff of the Commission that the staff either (i) issue an order pursuant to Section 12(h) of the Exchange Act exempting the Depositor from certain reporting requirements under the Exchange Act with respect to each Trust Fund or (ii) state that the staff will not recommend that the Commission take enforcement action if the Depositor fulfills its reporting obligations as described in its written request. If such request is granted, the Depositor will file or cause to be filed with the Commission as to each Trust Fund the periodic unaudited reports to holders of the Certificates referenced in the preceding paragraph. In addition, because of the limited number of Certificateholders expected for each series, the Depositor anticipates that a significant portion of such reporting requirements will be permanently suspended following the first fiscal year for the related Trust Fund. No person has been authorized to give any information or to make any representations other than those contained in this Prospectus and any Prospectus Supplement with respect hereto and, if given or made, such information or representations must not be relied upon. This Prospectus and any Prospectus Supplement with respect hereto do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the Certificates or an offer of the Certificates to any person in any state or other jurisdiction in which such offer would be unlawful. The delivery of this Prospectus at any time does not imply that information herein is correct as of any time subsequent to its date; however, if any material change occurs while this Prospectus is required by law to be delivered, this Prospectus will be amended or supplemented accordingly. Farmer Mac will publish and regularly update for the benefit of AMBS investors information about the Certificates and Qualified Loan Pools underlying such Certificates ("AMBS Information"). Generally, Farmer Mac will provide AMBS Information on a periodic scheduled basis after the date on which the related Pool is formed. The information will be available from various sources, including several information vendors that provide securities information. Investors can obtain the names of those vendors disseminating AMBS Information by writing Farmer Mac at 919 18th Street, N.W. Washington, D.C. 20006 or calling Farmer Mac's Investor Inquiry Department at 1-800-TRY-FARM (879-3276). INCORPORATION OF CERTAIN INFORMATION BY REFERENCE All documents and reports filed or caused to be filed by the Depositor with respect to a Trust Fund pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of an offering of Certificates evidencing interests therein shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof. In addition, Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 1995 and Farmer Mac's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 each filed with the Commission pursuant to the Exchange Act shall also be deemed to be incorporated by reference in this Prospectus and to be a part hereof. All documents filed by Farmer Mac pursuant to the Exchange Act subsequent to the date of this Prospectus and prior to the termination of any offering made by this Prospectus will likewise be deemed to be incorporated by reference herein. The Depositor will provide or cause to be provided without charge to each person to whom this Prospectus is delivered in connection with the offering of one or more Classes of Certificates, a copy of any or all documents or reports incorporated herein by reference, in each case to the extent such documents or reports relate to one or more of such Classes of such Certificates, other than the exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). Requests to the Depositor should be directed in writing to Farmer Mac Mortgage Securities Corporation, 919 18th Street, N.W., Suite200, Washington, D.C. 20006, Attention: Corporate Secretary. The Depositor has determined that its financial statements are not material to the offering of any Certificates. SUMMARY The following summary of certain pertinent information is qualified in its entirety by reference to the more detailed information appearing elsewhere in this Prospectus and by reference to the information with respect to each Series of Certificates contained in the Prospectus Supplement to be prepared and delivered in connection with the offering of such Series. An Index of Principal Definitions is included at the end of this Prospectus.
Title of Guaranteed Agricultural Mortgage-Backed Certificates Securities ("AMBS") issuable in Series (the "Certificates"). Guarantor Federal Agricultural Mortgage Corporation ("Farmer Mac"), a federally chartered instrumentality of the United States, established by Title VIII of the Farm Credit Act of 1971, as amended (the "Farmer Mac Charter"). The 1996 Amendment The Farm Credit System Reform Act of 1996 (the "1996 Amendment") signed into law by the President of the United States on February 10, 1996, modified the Farmer Mac Charter as it theretofore existed in several major respects, by, among other things (i) authorizing Farmer Mac to purchase Qualified Loans and to include such purchased Qualified Loans in Trust Funds serving as the basis for securities guaranteed by Farmer Mac, (ii) extending from December 1996 to December 1999 the statutory deadline for the full imposition of certain regulatory capital requirements applicable to Farmer Mac, and (iii) eliminating statutory requirements for credit support features aggregating not less than ten percent of the initial principal balances of Qualified Loans in a Trust Fund. The 1996 Amendment also made various statutory changes intended to further streamline program operations and clarify certain ambiguous statutory provisions. Depositor Farmer Mac Mortgage Securities Corporation, a wholly-owned subsidiary of Farmer Mac. See "THE DEPOSITOR" herein. The Master Farmer Mac will act as the Master Servicer Servicer of the Qualified Loans included in or underlying each Trust Fund (in such capacity, the "Master Servicer"). Although Farmer Mac will be legally and contractually responsible for all servicing, it will conduct its servicing responsibilities for each Trust Fund through one or more Central Servicers (each, a "Central Servicer") which will be identified in the related Prospectus Supplement. Trustee The trustee (the "Trustee") for each Series of Certificates will be named in the related Prospectus Supplement. See "DESCRIPTION OF THE AGREEMENTS_The Trustee." The Trust Assets Each Series of Certificates will represent in the aggregate the entire beneficial ownership interest in a Trust Fund consisting primarily of: (a) Qualified The Qualified Assets with respect to each Assets Series of Certificates will consist of (i) [agricultural real estate mortgage loans (collectively, the "Qualified Loans") (ii) the portions of loans guaranteed by the United States Secretary of Agriculture pursuant to the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) (the "ConAct") (the "Guaranteed Portions"), (iii) Farmer Mac Guaranteed Agricultural Mortgage-Backed Securities ("Trust Fund AMBS"), mortgage pass- through certificates or other mortgage- backed securities evidencing interests in or secured by Qualified Loans or Guaranteed Portions (collectively, the "QMBS") or (iv) a combination of Guaranteed Portions and QMBS. AMBS refers to Certificates issued and offered pursuant to this Registration Statement. The Qualified Loans will not be guaranteed or insured by Farmer Mac or any of its affiliates or by any governmental agency or instrumentality or other person. As more specifically described herein, the Qualified Loans will be secured by a fee simple mortgage or a minimum 50-year leasehold mortgage, with status as a first lien on Agricultural Real Estate (as defined below) that is located within the United States (the "Mortgaged Properties"). No Qualified Loan may have a loan-to-value ratio in excess of 70 percent. A Qualified Loan must be an obligation of (i) a citizen or national of the United States or an alien lawfully admitted for permanent residence in the United States; or (ii) a private corporation or partnership whose members, stockholders or partners holding a majority interest in the corporation or partnership are individuals described in clause (i). A Qualified Loan must also be an obligation of a person, corporation or partnership having farming experience or other training sufficient to ensure a reasonable likelihood of repayment of the loan according to its terms. A Qualified Loan may be an existing or newly originated mortgage loan that conforms to the requirements set forth in the Farmer Mac program documents (the "Guides"). Qualified Loans are secured by Agricultural Real Estate. "Agricultural Real Estate" is defined as a parcel or parcels of land, which may be improved by buildings or other structures permanently affixed to the parcel or parcels, that (a) are used for the production of one or more agricultural commodities and (b) consist of a minimum of five acres or are used in producing minimum annual receipts of at least $5,000. The principal amount of a Qualified Loan secured by Agricultural Real Estate may not exceed $3,500,000, as adjusted for inflation as of December 31, 1995. Each Qualified Loan may provide for accrual of interest thereon at an interest rate (a "Mortgage Interest Rate") that is fixed over its term or that adjusts from time to time, or is partially fixed and partially floating or that may be converted from a floating to a fixed Mortgage Interest Rate, or from a fixed to a floating Mortgage Interest Rate, from time to time at the Mortgagor's election, in each case as described in the related Prospectus Supplement. The floating Mortgage Interest Rates on the Qualified Loans in a Trust Fund may be based on one or more indices. Each Qualified Loan may provide for scheduled payments to maturity, payments that adjust from time to time to accommodate changes in the Mortgage Interest Rate or to reflect the occurrence of certain events, and may provide for accelerated amortization, in each case as described in the related Prospectus Supplement. Each Qualified Loan may be fully amortizing or require a balloon payment (each such payment, a "Balloon Payment") due on its stated maturity date, in each case as described in the related Prospectus Supplement. Each Qualified Loan may contain prohibitions on prepayment or require payment of a Prepayment Premium or a Yield Maintenance Charge (each term as defined herein) in connection with a prepayment, in each case as described in the related Prospectus Supplement. The Qualified Loans may provide for payments of principal, interest or both, on due dates that occur quarterly, semi-annually, annually or at such other interval as is specified in the related Prospectus Supplement. See "DESCRIPTION OF THE TRUST FUNDS -- Assets." (b) Farmer Mac Guarantee The Certificates of each Series will be covered by a Farmer Mac Guarantee. Because the Farmer Mac Guarantee runs directly to Holders, it does not directly cover payments on the related Qualified Loans included in or underlying the related Trust Fund. Each Farmer Mac Guarantee will provide for the payment by Farmer Mac to Holders of any and all amounts necessary to assure the timely payment of all required distributions of interest and principal on the Certificates to the extent set forth in the related Prospectus Supplement. The related Prospectus Supplement will specify the extent of Farmer Mac's guarantee obligation, if any, with respect to any Qualified Balloon Loan in default as to its Balloon Payment and will discuss any resulting impact on the expected yield of the related Certificates. See "YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS" in the related Prospectus Supplement. In addition, Farmer Mac guarantees the distribution to Holders of the principal balance of each Class of Certificates in full no later than the related Final Distribution Date, whether or not sufficient funds are available in the Certificate Account. Farmer Mac's obligations under each Farmer Mac Guarantee are obligations solely of Farmer Mac and are not backed by the full faith and credit of the United States. Farmer Mac will not guarantee the collection from any borrower of any yield maintenance charge ("Yield Maintenance Charge") or any other premium ("Prepayment Premiums") payable in connection with a principal prepayment on a Qualified Loan, and in the event the related Trust Agreement entitles the related Holders to receive distributions of such Yield Maintenance Charges or Prepayment Premiums, such Holders will receive such amounts only to the extent actually collected. Under the Farmer Mac Charter, Farmer Mac is required to establish a segregated account into which it will deposit a portion of the guarantee fees it receives for its guarantee obligations. Farmer Mac expects that its future contingent liabilities in respect of guarantees of outstanding securities backed by agricultural mortgage loans will substantially exceed any amounts on deposit in such reserve account. The amount on deposit in such reserve account as of the end of any calendar quarter is set forth (as an allowance for losses) in Farmer Mac's consolidated balance sheet filed with the Commission and incorporated by reference herein. See, INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" herein. If this reserve account so established, together with any remaining general Farmer Mac assets, is insufficient to enable Farmer Mac to make a required payment under any Farmer Mac Guarantee, Farmer Mac will issue obligations to the Secretary of the Treasury in an amount at any time outstanding not to exceed $1,500,000,000. The Secretary of the Treasury is required to purchase obligations issued by Farmer Mac not later than ten business days after receipt by the Secretary of the Treasury of a certification by Farmer Mac in accordance with the requirements of the Farmer Mac Charter. The Trust Agreement will contain various timing mechanisms designed to assure that Farmer Mac will have sufficient advance notice of any obligation under a Farmer Mac Guarantee in order, to the extent required, to make timely demand upon the Secretary of the Treasury. If for any reason beyond the control of any Holder, such Holder fails to receive on any Distribution Date such Holder's portion of any payment required pursuant to the Farmer Mac Guarantee, such Holder may, through the related Trustee, enforce such obligation against Farmer Mac to the extent of such Holder's portion. Farmer Mac anticipates that its future contingent liabilities in respect of guarantees of outstanding securities backed by agricultural mortgage loans will greatly exceed its resources, including its limited ability to borrow from the United States Treasury. See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" herein.
(c) Collection Account; Certificate Account Each Trust Fund will include one or more accounts established and maintained on behalf of the Certificateholders into which the Central Servicer designated in the related Prospectus Supplement will, to the extent described herein and in such Prospectus Supplement, deposit all payments and collections received or advanced with respect to the Qualified Assets and other assets in the Trust Fund. Such an account may be maintained as an interest bearing or a non-interest bearing account, and funds held therein may be held as cash or invested in certain short-term obligations. Approximately ten days prior to each Distribution Date, the Central Servicer will remit to Farmer Mac, as Master Servicer, for deposit into the Certificate Account maintained by it funds then held in the Collection Account that are applicable to the distribution on such following Distribution Date. See "DESCRIPTION OF THE AGREEMENTS -- Accounts" herein. Description of Certificates Each Series of Certificates evidencing an interest in a Trust Fund will be issued pursuant to a Trust Agreement. If Qualified Loans are included in a Trust Fund, they will be master serviced by Farmer Mac pursuant to the related Trust Agreement. Farmer Mac's servicing responsibilities under the Trust Agreement will be performed on its behalf by one or more Central Servicers pursuant to Servicing Contracts with Farmer Mac. In addition, Qualified Assets deposited into a Trust Fund by the Depositor will have been sold to it by Originators or other holders of Qualified Loans (collectively, "Sellers") pursuant to a Loan Sale Agreement (each a "Sale Agreement"). The Trust Agreements, Servicing Contracts and Sale Agreements for a particular Trust Fund are referred to herein as the "Agreements." Each Series of Certificates will include one or more Classes. Each Series of Certificates will represent in the aggregate the entire beneficial ownership interest in the related Trust Fund. Each Class of Certificates (other than certain Stripped Interest Certificates, as defined below) will have a stated principal amount (a "Certificate Balance") and (other than certain Stripped Principal Certificates, as defined below), will accrue interest thereon based on a fixed, variable or floating interest rate (a "Pass-Through Rate"). The related Prospectus Supplement will specify the Certificate Balance, if any, and the Pass-Through Rate, if any, for each Class of Certificates or, in the case of a variable or floating Pass-Through Rate, the method for determining the Pass-Through Rate. See "DESCRIPTION OF THE CERTIFICATES" herein and in the related Prospectus Supplement. Distributions on Certificates Each Series of Certificates will consist of one or more Classes of Certificates that may (i) provide for the accrual of interest thereon based on fixed, variable or floating rates; (ii) be entitled to principal distributions with disproportionately low, nominal or no interest distributions (collectively, "Stripped Principal Certificates"); (iii) be entitled to interest distributions with disproportionately low, nominal or no principal distributions (collectively, "Stripped Interest Certificates"); (iv) provide for distributions of accrued interest thereon commencing only following the occurrence of certain events, such as the retirement of one or more other classes of Certificates of such Series (collectively, "Accrual Certificates"); (v) provide for distributions of principal sequentially, based on specified payment schedules or other methodologies; (vi) provide for distributions based on a combination of two or more components thereof with one or more of the characteristics described in this paragraph, including a Stripped Principal Certificate component and a Stripped Interest Certificate component, to the extent of available funds; and/or (vii) to the extent the Trust Agreement so provides, be entitled to distributions of any Prepayment Premiums and Yield Maintenance Charges to the extent collected, in each case as described in the related Prospectus Supplement. With respect to Certificates with two or more components, references herein to Certificate Balance, notional amount and Pass-Through Rate refer to the principal balance, if any, notional amount, if any, and the Pass-Through Rate, if any, for any such component. (a) Interest Interest on each class of Certificates (other than Stripped Principal Certificates and certain classes of Stripped Interest Certificates) of each Series will accrue at the applicable Pass-Through Rate on the outstanding Certificate Balance thereof and will be distributed to Certificateholders as provided in the related Prospectus Supplement (each of the specified dates on which distributions are to be made, a "Distribution Date"). Distributions with respect to interest on Stripped Interest Certificates may be made on each Distribution Date on the basis of a notional amount as described in the related Prospectus Supplement. Stripped Principal Certificates with no stated Pass- Through Rate will not accrue interest. See "YIELD CONSIDERATIONS" and "DESCRIPTION OF THE CERTIFICATES -- Distributions of Interest on the Certificates" herein. (b) Principal The Certificates of each Series will have an aggregate Certificate Balance no greater than the outstanding principal balance of the Qualified Assets as of the close of business on the first day of formation of the related Trust Fund (the "Cut-off Date"), after application of scheduled payments due on or before such date, whether or not received. The Certificate Balance of a Certificate outstanding from time to time represents the maximum amount that the holder thereof is then entitled to receive in respect of principal from future cash flow on the assets in the related Trust Fund. Distributions of principal will be made on each Distribution Date to the Class or Classes of Certificates entitled thereto until the Certificate Balances of such Certificates have been reduced to zero. Distributions of principal of any Class of Certificates will be made on a pro rata basis among all of the Certificates of such Class or by random selection, as described in the related Prospectus Supplement. Stripped Interest Certificates with no Certificate Balance will not receive distributions in respect of principal. See "DESCRIPTION OF THE CERTIFICATES -- Distributions of Principal of the Certificates" herein. Qualified Loan The Qualified Loans in a Trust Fund may be Groups divided, to the extent set forth in the related Prospectus Supplement, into two or more Qualified Loan Groups comprised of Qualified Loans having, in some cases, similar Due Dates for scheduled payments and/or in other cases generally similar Mortgage Interest Rates or methods of calculating such rates and scheduled final maturities. The related Prospectus Supplement will specify whether a Qualified Loan Group will, for Farmer Mac designation and reporting purposes, constitute a Pool and will specify the numerical designation for each Pool comprising the related Series. Payments of interest and principal on the Qualified Loans in a Qualified Loan Group, will be applied first to required distributions on the related Class or Classes of Certificates. Thus, each Qualified Loan Group and each related Class or Classes of Certificates will be separate and distinct from every other Qualified Loan Group and its related Class or Classes of Certificates, except with respect to Certificates evidencing an ownership interest only in interest payments or residual payments from Qualified Loans in two or more Qualified Loan Groups. Information with respect to any Qualified Loan Group will be set forth in the related Prospectus Supplement. If the Qualified Loans included in a Trust Fund are divided into Qualified Loan Groups, references herein to the Qualified Loans in such Trust Fund will refer, to the extent required by the context, to such Qualified Loan Groups. Advances Each Central Servicer will be obligated as part of its sub-servicing responsibilities to make certain advances with respect to delinquent scheduled payments on the Qualified Loans in such Trust Fund deemed to be recoverable ("Advances"). Neither the Depositor nor any of its affiliates will have any responsibility to make such Advances, although the failure to advance may trigger Farmer Mac's obligations under the Farmer Mac Guarantee. Advances are reimbursable generally from subsequent recoveries in respect of such Qualified Loans and otherwise to the extent described herein and in the related Prospectus Supplement. The Prospectus Supplement for any Series of Certificates evidencing an interest in a Trust Fund that includes QMBS will describe any corresponding advancing obligation of any person in connection with such QMBS. See "DESCRIPTION OF THE CERTIFICATES -- Advances in Respect of Delinquencies" herein. Termination If so specified in the related Prospectus Supplement, a Series of Certificates may be subject to optional early termination through the repurchase of the Qualified Assets in the related Trust Fund by the party specified therein, under the circumstances and in the manner set forth therein. If so provided in the related Prospectus Supplement, upon the reduction of the Certificate Balance of a specified Class or Classes of Certificates by a specified percentage or amount or on and after a date specified in such Prospectus Supplement, the party specified therein will solicit bids for the purchase of all of the Qualified Assets of the Trust Fund, or of a sufficient portion of such Qualified Assets to retire such Class or Classes, or purchase such Qualified Assets at a price set forth in the related Prospectus Supplement. In addition, if so provided in the related Prospectus Supplement, certain Classes of Certificates may be purchased subject to similar conditions. See "DESCRIPTION OF THE CERTIFICATES -- Termination" herein. Tax Status of the Certificates The Certificates of each Series will constitute either (i) "regular interests" ("REMIC Regular Certificates") or "residual interests" ("REMIC Residual Certificates") in a Trust Fund treated as a real estate mortgage investment conduit ("REMIC") under Sections 860A through 860G of the Internal Revenue Code of 1986, as amended (the "Code"), or (ii) interests ("Grantor Trust Certificates") in a Trust Fund treated as a grantor trust within the meaning under subpart E, Part I of subchapter J of the Code. (a) REMIC REMIC Regular Certificates generally will be treated as debt obligations of the applicable REMIC for federal income tax purposes. Certain REMIC Regular Certificates may be issued with original issue discount for federal income tax purposes. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the related Prospectus Supplement. The Certificates will be treated as (i) "qualifying real property loans" within the meaning of section 593(d)(1) of the Code, (ii) assets described in section 7701(a)(19)(C) of the Code and (iii) "real estate assets" within the meaning of section 856(c)(5)(A) of the Code, in each case to the extent described herein and in the related Prospectus Supplement. See "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" herein and in the related Prospectus Supplement. (b) Grantor Trust If no election is made to treat the Trust Fund relating to a Series of Certificates as a REMIC, the Trust Fund will be classified as a grantor trust and not as an association taxable as a corporation for federal income tax purposes, and therefore holders of Certificates will be treated as the owners of undivided pro rata interest in the related Trust Assets. Investors are advised to consult their tax advisors and to review "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" herein and in the related Prospectus Supplement. ERISA The acquisition of a Certificate by a plan subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any individual retirement account ("IRA") or any other plan subject to Code Section 4975 could, in some instances, result in a prohibited transaction or other violations of the fiduciary responsibility provisions of ERISA and Code Section 4975. Certain exemptions from the prohibited transaction rules could, however, be applicable. See "ERISA CONSIDERATIONS" herein and in the related Prospectus Supplement. Legal Investment The Certificates will constitute securities guaranteed by Farmer Mac for purposes of the Farmer Mac Charter and, as such, will, by statute, be legal investments for certain types of institutional investors to the extent that those investors are authorized under any applicable law to purchase, hold, or invest in obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality of the United States. Investors whose investment authority is subject to legal restrictions should consult their own legal advisors to determine whether and to what extent specific Classes of the Certificates (particularly Classes of Stripped Interest or Stripped Principal Certificates) constitute legal investments for them. See "LEGAL INVESTMENT" herein and in the related Prospectus Supplement.
RISK FACTORS Investors should consider, in connection with the purchase of Certificates, among other things, the following factors and certain other factors as may be set forth in "RISK FACTORS" in the related Prospectus Supplement. RECENT DEVELOPMENTS AFFECTING FARMER MAC The Farm Credit System Reform Act of 1996 (the "1996 Amendment") modified the Farmer Mac Charter (as defined herein) by, among other things, requiring Farmer Mac to increase its capital to at least $25 million by February 1998 (or sooner if business volume increases substantially). The failure to raise capital to the required level in accordance with the 1996 Amendment would result in the suspension of Farmer Mac's ability to purchase new Qualified Loans or issue or guarantee new securities and could adversely affect the liquidity of any outstanding Certificates of any Class or Series. As of March 31, 1996, Farmer Mac's capital as reported on its unaudited financial statements for the three month period ended March 31, 1996 included as an exhibit to its Quarterly Report on Form 10-Q was $11.373 million. Since that date, Farmer Mac issued additional stock, which generated $2.56 million in capital. See Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 1995 and Quarterly Report on Form 10-Q for the three month period ended March 31, 1996, each filed with the Commission pursuant to the Exchange Act and incorporated by reference in this Prospectus. "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" and "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" herein. LIMITED LIQUIDITY There can be no assurance that a secondary market for the Certificates of any Series will develop or, if it does develop, that it will provide holders with liquidity of investment or will continue while Certificates of such Series remain outstanding. Any such secondary market may provide less liquidity to investors than any comparable market for securities evidencing interests in single family mortgage loans. The market value of Certificates will fluctuate with changes in prevailing rates of interest. Consequently, sale of Certificates by a holder in any secondary market that may develop may be at a discount from 100% of their original Certificate Balance or from their purchase price. Except to the extent described herein and in the related Prospectus Supplement, Certificateholders will have no redemption rights and the Certificates are subject to early retirement only under certain specified circumstances described herein and in the related Prospectus Supplement. See "DESCRIPTION OF THE CERTIFICATES -- Termination" herein. FARMER MAC GUARANTEE Farmer Mac's obligations under each Farmer Mac Guarantee are obligations solely of Farmer Mac and are not backed by the full faith and credit of the United States. Farmer Mac intends that the primary sources of funding for the payment of claims, if any, under any Farmer Mac Guarantees will be (i) the fees Farmer Mac charges for providing its guarantee and (ii) Farmer Mac's general assets which are insignificant in relation to its potential exposure to any meaningful level of Farmer Mac Guarantees. A portion of the guarantee fees received is required to be set aside by Farmer Mac in a segregated account as a reserve against losses from its guarantee activities. Farmer Mac expects that its future contingent liabilities in respect of guarantees of outstanding securities backed by agricultural mortgage loans will substantially exceed any amounts on deposit in such reserve account. This reserve account must be exhausted before Farmer Mac issues obligations to the Secretary of the Treasury against the $1,500,000,000 Farmer Mac is authorized to borrow from the Secretary of the Treasury pursuant to the Farmer Mac Charter. The Secretary of the Treasury is required under the Farmer Mac Charter to purchase obligations issued by Farmer Mac not later than ten business days after receipt by the Secretary of the Treasury of a certification by Farmer Mac in the form prescribed by the Farmer Mac Charter. The Trust Agreement will contain various timing mechanisms designed to assure that Farmer Mac will have sufficient advance notice of any obligation under a Farmer Mac Guarantee in order, to the extent required, to make timely demand upon the Secretary of the Treasury. If for any reason beyond the control of any Holder, such Holder fails to receive on any Distribution Date such Holder's portion of any payment required pursuant to the Farmer Mac Guarantee, such Holder may, through the related Trustee, enforce such obligation against Farmer Mac to the extent of such Holder's portion. Farmer Mac anticipates that its future contingent liabilities in respect of guarantees of outstanding securities will greatly exceed its resources, including its limited ability to borrow from the United States Treasury referred to above. See "FEDERAL AGRICULTURAL MORTGAGE CORPORATION" herein. Farmer Mac will not guarantee the collection from any borrower of any yield maintenance charge ("Yield Maintenance Charge") or any other premium (collectively, "Prepayment Premiums") payable in connection with a principal prepayment on a Qualified Loan, and in the event the related Trust Agreement entitles the related Holders to receive distributions of such Yield Maintenance Charges or Prepayment Premiums, such Holder will receive such amounts only to the extent actually collected. YIELD, PREPAYMENT AND MATURITY CONSIDERATIONS Agricultural lending is generally viewed as exposing lenders to a greater risk of loss than single-family residential lending. Agricultural lending typically involves larger loans to single borrowers than does lending on single- family residences. Repayment of agricultural loans is typically dependent upon the success of the related farming operation, which is, in turn, dependent upon many variables and factors over which farmers may have little or no control, such as weather conditions, economic conditions (both domestically and internationally) and even political conditions. If the cash flow from a farming operation is diminished (for example, adverse weather conditions destroy a crop or prevent the planting or harvesting of a crop), the borrower's ability to repay the loan may be impaired. Agricultural lending is perhaps more affected by circumstances beyond the control of the borrower than any other area of real estate lending. Under the Farmer Mac Guarantee, Holders will continue to receive required interest and principal distributions on each Distribution Date regardless of whether sufficient funds have been collected from borrowers. In addition, principal prepayments resulting from liquidations of Qualified Loans due to defaults or other calamities affecting Qualified Loans, or repurchases of Qualified Loans due to breaches of representations and warranties may significantly affect the yield to investors. The rates of prepayment and default on the Qualified Loans in a particular Trust Fund will affect the anticipated maturities and yields to maturity of the related Certificates. Little or no historical data is available to provide assistance in estimating the rate of prepayments and defaults on loans secured by Agricultural Real Estate. The yield to investors in each Class of a Series of Certificates will be sensitive in varying degrees to the rate and timing of principal payments (including prepayments) of the underlying Qualified Assets, which, in the case of each Trust Fund, will be prepayable to the extent described in the related Prospectus Supplement. In addition, the yield to maturity on a Class of Certificates may vary depending on the extent to which such Class is purchased at a discount or premium. Holders of Certificates should consider, in the case of any Certificates purchased at a discount, the risk that a slower than anticipated rate of principal payments could result in an actual yield that is lower than the anticipated yield and, in the case of any Certificates purchased at a premium, the risk that a faster than anticipated rate of principal payments could result in an actual yield that is lower than the anticipated yield. The yield to maturity on each Class of Certificates will be extremely sensitive to the rate and timing of principal payments (including prepayments) of the underlying Qualifying Loans, which may fluctuate significantly from time to time. Investors should fully consider the associated risks, including the risk that an extremely rapid rate of principal payments on the Qualified Loans could result in the failure of investors in any Class of Stripped Interest Certificates to recoup their initial investments. See "YIELD CONSIDERATIONS -- Payments of Principal; Prepayments" herein. Most loans secured by Agricultural Real Estate contain lock-out periods in which prepayments are completely prohibited or set forth maximum amounts that may be prepaid in any year, contain restrictions on the source of prepayments, or impose prepayment penalties or charges and/or other restrictions on prepayments including Yield Maintenance Charges. Because Farmer Mac does not guarantee the collection of any Yield Maintenance Charges or Prepayment Premiums on the underlying Qualified Loans, the expected yield to investors in the Certificates may be sensitive in varying degrees to the extent such amounts are not collected. In addition, the required payment of Prepayment Premiums or Yield Maintenance Charges may not be a sufficient disincentive to prevent the voluntary prepayment of the Qualified Loans, and even if collected, allocation thereof to any Class may be insufficient to offset fully the adverse effects on the anticipated yield thereon arising out of the corresponding principal payment. Each Prospectus Supplement will describe the extent to which any restrictions on prepayments are applicable to the underlying Qualified Loans and the standard or standards, if any, applicable to the enforcement by the related Central Servicer of any such restrictions. Each Prospectus Supplement will also set forth the extent to which the underlying Qualified Loans include "due on sale" clauses which permit the mortgagee to demand payment of the entire Qualified Loan in connection with the sale or certain transfers of the related mortgaged property. Standards applicable to the enforcement or waiver by the related Central Servicer of any such "due on sale" clauses will also be described in the related Prospectus Supplement. BOOK-ENTRY REGISTRATION If so provided in the Prospectus Supplement, one or more Classes of the Certificates will be issued and maintained and may be transferred only on the book-entry system of the Federal Reserve Banks and/or will be initially represented by one or more certificates registered in the name of the nominee for the central depository identified therein, and will not be registered in the names of the Beneficial Owners or their nominees. Because of this, unless and until Definitive Certificates are issued, Beneficial Owners will not be recognized by the Trustee as "Certificateholders" (as that term is to be used in the Trust Agreement). Hence, until such time, Beneficial Owners will be able to exercise the rights of Certificateholders only indirectly through the Federal Reserve Banks and their participating financial institutions or through such central depository and its participating organizations. See "DESCRIPTION OF THE CERTIFICATES -- Book-Entry Registration and Definitive Certificates" herein. DESCRIPTION OF THE TRUST FUNDS ASSETS The primary assets of each Trust Fund are set forth above under "Summary , The Trust Assets". The Certificates of any Series will be entitled to payment only from the assets of the related Trust Fund and will not be entitled to payments in respect of the assets of any other trust fund established by the Depositor. If specified in the related Prospectus Supplement, the assets of a Trust Fund will consist of certificates representing beneficial ownership interests in another trust fund that contains Qualified Assets. QUALIFIED LOANS General The general characteristics of and eligibility standards for Qualified Loans are set forth above under "Summary , The Trust Assets - (a) Qualified Assets." In addition to these general statutory standards, Farmer Mac has established supplemental standards described below in an effort to reduce the risk of loss from defaults by borrowers and to provide guidance to a participant in its guarantee program concerning management, administration and conduct of appraisals. Farmer Mac's Underwriting and Appraisal Standards (the "Underwriting Standards" and the "Appraisal Standards") are based on industry norms for mortgage loans qualified to be sold in the secondary market, and are designed to assess the creditworthiness of the borrower as well as the value of the Mortgaged Properties relative to the amount of the Qualified Loan. Farmer Mac generally relies on representations and warranties made by the Seller to ensure that the Qualified Loans contained in the Trust Fund conform to such Underwriting Standards and other requirements of the Guides. The Underwriting Standards require, among other things, that the loan-to-value ratio for any Qualified Loan cannot exceed 70%. In the case of newly originated Qualified Loans secured by Agricultural Real Estate, borrowers must also meet certain credit ratios, including: (i) a pro forma (after closing the new loan) debt-to-asset ratio of 50% or less; (ii) a pro forma cash flow debt service coverage ratio of not less than 1:1 on the subject property; (iii) a total debt service coverage ratio, computed on a pro forma basis, of not less than 1.25:1, including farm and on-farm income; and (iv) a ratio of current assets to current liabilities, computed on a pro forma basis, of not less than 1:1. In the case of existing loans, sustained loan performance is considered by Farmer Mac to be a reliable alternative indicator of a borrower's ability to pay the loan according to its terms. An existing loan generally will be eligible for inclusion if it is at least three years old, has a loan-to-value ratio (based on an updated appraisal) of 70% or less if the loan is at least five years old (60% if the loan is less than five years old), and there have been no payments more than 60 days past due during the three years prior to pooling and no material restructurings or modifications for credit reasons during the five years prior to pooling. The Mortgaged Property securing a Qualified Loan must be covered by a hazard insurance policy. The coverage of such policy is required to be in an amount not less than the maximum insurable value of the Mortgaged Property securing the related Qualified Loan from time to time or the principal balance outstanding on the related Qualified Loan, whichever is less. Each such hazard insurance policy covers physical damage to or destruction of the improvements of the property by fire, lightning, explosion, smoke, windstorm and hail, riot, strike and civil commotion, subject to the conditions and exclusions specified in each policy. To the extent the Mortgaged Property is located in an area designated as a flood plain by the Federal government, a flood insurance policy must be maintained for such Mortgaged Property. The Underwriting Standards provide that Farmer Mac may purchase or guarantee securities backed by loans that do not conform to one or more of the Underwriting Standards when: (a) those loans exceed one or more of the Underwriting Standards to which they do conform to a degree that compensates for noncompliance with one or more other Underwriting Standards and (b) those loans are made to producers of particular agricultural commodities in a segment of agriculture in which such non-conformance and compensating strengths are typical of the financial condition of sound borrowers. The acceptance by Farmer Mac of loans that do not conform to one or more of the Underwriting Standards is not intended to provide a basis for waiving or lessening in any way the requirement that loans be of high quality in order to be included in Trust Fund. The entity that requests the acceptance by Farmer Mac of such loans bears the burden of convincing Farmer Mac that the loans meet both tests as set forth in clauses (a) and (b) above, and that the inclusion of such loans in a Trust Fund, will strengthen, not weaken, the overall performance of the Trust Fund. For those reasons, Farmer Mac does not believe that the inclusion of such loans in a particular Trust Fund creates any additional risk to prospective investors. The Appraisal Standards for newly originated loans require, among other things, that the appraisal function be performed independently of the credit decision making process. The Appraisal Standards require the appraisal function to be conducted or administered by an individual meeting certain qualification criteria who (a) is not associated, except by the engagement for the appraisal, with the credit underwriters who make the loan decision, though both the appraiser and the credit underwriter may be directly or indirectly employed by a common employer, (b) receives no financial or professional benefit of any kind relative to the report content, valuation or credit decision made or based on the appraisal product; and (c) has no present or contemplated future direct or indirect interest in the appraised property. The Appraisal Standards also require uniform reporting of reliable and accurate estimates of the market value, market rent and net property income characteristics of the mortgaged property and the market forces relative thereto. Qualified Loan Information in Prospectus Supplements Each Prospectus Supplement will contain information, as of the date of such Prospectus Supplement, with respect to the Qualified Loans, generally including (i) the aggregate outstanding principal balance and the largest, smallest and average outstanding principal balance of the Qualified Loans as of the applicable Cut-off Date, (ii) the percentage (by principal balance) of Qualified Loans secured by Mortgaged Properties upon which specified commodity groups are produced (i.e. (a) food grains, (b) feed crops, (c) cotton/tobacco, (d) oilseeds, (e) potatoes, tomatoes and other vegetables, (f) permanent plantings, (g) sugarbeets, cane and other crops, (h) timber, (i) dairy, (j) cattle and calves and (k) sheep, lamb and other livestock), (iii) the weighted average (by principal balance) of the original and remaining terms to maturity of the Qualified Loans, (iv) the earliest and latest origination date and maturity date of the Qualified Loans, (v) the weighted average (by principal balance) of the current loan-to-value ratios of the Qualified Loans, (vi) the Mortgage Interest Rates or range of Mortgage Interest Rates and the weighted average Mortgage Interest Rate borne by the Qualified Loans, (vii) the geographic distribution of Qualified Loans secured by Mortgaged Properties, (viii) information with respect to the amortization provisions and provisions relating to prepayment, including any Prepayment Premiums, Yield Maintenance Charges or lock- outs, if any, of the Qualified Loans, (ix) with respect to Qualified Loans with floating Mortgage Interest Rates ("ARM Loans"), the index, the frequency of the adjustment dates, the highest, lowest and weighted average note margin and pass- through margin, and the maximum Mortgage Interest Rate or monthly payment variation at the time of any adjustment thereof and over the life of the ARM Loan and the frequency of such monthly payment adjustments, (x) information regarding the payment characteristics of the Qualified Loans, including without limitation, Balloon Payments. If specific information respecting the Qualified Loans is not known at the time Certificates are initially offered, more general information of the nature described above will be provided in the Prospectus Supplement, and specific information will be set forth in a report which will be available to purchasers of the related Certificates at or before the initial issuance thereof and will be filed as part of a Current Report on Form 8-K with the Commission within fifteen days after such initial issuance. QMBS Any QMBS will have been issued pursuant to a participation and servicing agreement, a pooling and servicing agreement, a trust agreement, an indenture or similar agreement (a "QMBS Agreement"). A seller (the "QMBS Issuer") and/or servicer (the "QMBS Servicer") of the underlying Qualified Loans (or Underlying QMBS) will have entered into the QMBS Agreement with a trustee or a custodian under the QMBS Agreement (the "QMBS Trustee"), if any, or with the original purchaser of the interest in the underlying Qualified Loans or QMBS evidenced by the QMBS. Distributions of any principal or interest, as applicable, will be made on QMBS on the dates specified in the related Prospectus Supplement. The QMBS may be issued in one or more Classes with characteristics similar to the Classes of Certificates described in this Prospectus. Any principal or interest distributions will be made on the QMBS by the QMBS Trustee or the QMBS Servicer. The QMBS Issuer or the QMBS Servicer or another person specified in the related Prospectus Supplement may have the right or obligation to repurchase or substitute assets underlying the QMBS for the breach of certain representations and warranties contained in the underlying trust agreement or pooling and servicing agreement or under other circumstances specified in the related Prospectus Supplement. The Prospectus Supplement for a Series of Certificates evidencing interests in Qualified Assets that include QMBS generally will specify, (i) the aggregate approximate initial and outstanding principal amount or notional amount, as applicable, and type of the QMBS to be included in the related Trust Fund, (ii) the original and remaining term to stated maturity of the QMBS, if applicable, (iii) whether such QMBS is entitled only to interest payments, only to principal payments or to both, (iv) the pass-through or bond rate of the QMBS or formula for determining such rates, if any, (v) the applicable payment provisions for the QMBS, including, but not limited to, any priorities, payment schedules and subordination features, (vi) the QMBS Issuer, QMBS Servicer and QMBS Trustee, as applicable, (vii) certain characteristics of the credit support, if any, such as guarantees, subordination, reserve funds, insurance policies or letters of credit or relating to the related underlying Qualified Loans, the underlying QMBS or directly to such QMBS, (viii) the terms on which the related underlying Qualified Loans or underlying QMBS for such QMBS or the QMBS may, or are required to, be purchased prior to their maturity, (ix) the terms on which Qualified Loans or underlying QMBS may be substituted for those originally underlying the QMBS, (x) the servicing fees payable under the QMBS Agreement, (xi) the type of information in respect of the underlying Qualified Loans described under "-- Qualified Loans -- Qualified Loan Information in Prospectus Supplements" above, and the type of information in respect of the underlying QMBS described in this paragraph, (xii) the characteristics of any cash flow agreements that are included as part of the trust fund evidenced or secured by the QMBS and (xiii) whether the QMBS is in certificated form, book- entry form or held through a depository such as The Depository Trust Company or the Participant's Trust Company. GUARANTEED PORTIONS The participation in a loan guaranteed (each such participation in the related whole loan being referred to herein as a "Guaranteed Portion" and the related guarantee being referred to herein as a "Secretary's Guarantee") by the Secretary of Agriculture pursuant to the Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et seq.) (the "ConAct") is statutorily included in the definition of loans eligible as "Qualified Loans" for Farmer Mac secondary market programs. Guaranteed Portions are exempt from all underwriting, appraisal and repayment standards otherwise applicable to Qualified Loans. The maximum loss covered by a Secretary's Guarantee can never exceed the lesser of (1) 90% of principal and interest indebtedness on the Guaranteed Loan, any loan subsidy due, and 90% of principal and interest indebtedness on secured authorized protective advances for protection and preservation of the related mortgaged property; and (2) 90% of the principal advanced to or assumed by the borrower under the Guaranteed Loan and any interest due (including a loan subsidy). The Secretary's Guarantee is a full faith and credit obligation of the United States. Any Guaranteed Portion is the portion of the loan that is fully guaranteed as to principal and interest due on such loan as described below. The Secretary's Guarantee is activated if a Lender fails to repurchase the Guaranteed Portion from the owner thereof (the "Owner") within thirty (30) days of written demand from the Owner when (a) the borrower under the Guaranteed Loan (the "Borrower") is in default not less than sixty (60) days in the payment of any principal or interest due on the Guaranteed Portion, or (b) the Lender has failed to remit to the Owner the payment made by the Borrower on the Guaranteed Portion or any related loan subsidy within thirty (30) days of the Lender's receipt thereof. If the Lender does not repurchase the Guaranteed Portion as provided above, the Secretary is required to purchase the unpaid principal balance of the Guaranteed Portion together with accrued interest (including any loan subsidy) to the date of purchase, less the servicing fee, within thirty (30) days of written demand from the Owner. While the Secretary's Guarantee will not cover the note interest on Guaranteed Portions accruing after ninety (90) days from the date of the original demand letter to the Lender requesting repurchase, procedures will be set forth in the related Trust Agreement to require tendering of Guaranteed Portions in a timely manner so as not to exceed the 90-day period. If in the opinion of the Lender (with the concurrence of the Secretary) or in the opinion of the Secretary, repurchase of the Guaranteed Portion is necessary to service adequately the related Guaranteed Loan, the Owner will sell the Guaranteed Portion to the Lender or the Secretary for an amount equal to the unpaid principal balance and accrued interest (including any loan subsidy) on such Guaranteed Portion less the Lender's servicing fee. Regulations prohibit the Lender from repurchasing Guaranteed Portions for arbitrage purposes. All Guaranteed Loans must be originated and serviced by eligible Lenders. Under regulations, all eligible Lenders must be subject to credit examination and supervision by either an agency of the United States or a state, must be in good standing with their licensing authorities and have met any licensing, loan making, loan servicing and other applicable requirements of the state in which the collateral for a Guaranteed Loan will be located. The Lender on each Guaranteed Loan is required to retain the unguaranteed portion of the Guaranteed Loan (the "Unguaranteed Portion"), to service the entire underlying Guaranteed Loan, including the Guaranteed Portion and to remain mortgagee and/or secured party of record. The Guaranteed Portion and the Unguaranteed Portion of the underlying Guaranteed Loan are to be secured by the same security with equal lien priority. The Guaranteed Portion cannot be paid later than or in any way be subordinated to the related Unguaranteed Portion. The Farmer Mac Guarantee of Certificates evidencing interests in a Trust Fund containing Guaranteed Portions will cover the timely payment of interest on and principal of such Certificates (regardless of whether payment has been made under the Secretary's Guarantee). USE OF PROCEEDS The net proceeds to be received from the sale of a Series of Certificates by the Depositor will be applied by the Depositor to the purchase of Trust Assets from Sellers and to pay for certain expenses incurred in connection with such purchase of Trust Assets and sale of Certificates. The Depositor expects to sell the Certificates from time to time, but the timing and amount of offerings of Certificates will depend on a number of factors, including the volume of Qualified Assets acquired by the Depositor, prevailing interest rates, availability of funds and general market conditions. Rather than sell Certificates directly itself, the Depositor expects that Certificates comprising a substantial number of Series will be exchanged by the Depositor for Qualified Assets being sold or swapped to it by Sellers. In such instances, the net proceeds of the sale of Certificates will be paid directly to such Sellers who, presumably, will apply the same towards general business purposes. YIELD CONSIDERATIONS GENERAL The yield on any Certificate will depend on the price paid by the Certificateholder, the Pass-Through Rate of the Certificate, the receipt and timing of receipt of distributions on the Certificate and the weighted average lives of the Qualified Assets in the related Trust Fund, which may be affected by prepayments, defaults, liquidations or repurchases. See "RISK FACTORS" herein and in the related Prospectus Supplement. PASS-THROUGH RATE Certificates of any class within a Series may have fixed, variable or floating Pass-Through Rates, which may or may not be based upon the interest rates borne by the Qualified Assets in the related Trust Fund. The Prospectus Supplement with respect to any Series of Certificates will specify the Pass-Through Rate for each class of such Certificates or, in the case of a variable or floating Pass-Through Rate, the method of determining the Pass-Through Rate; and the effect, if any, of the prepayment of any Qualified Asset on the Pass-Through Rate of one or more classes of Certificates. The effective yield to maturity to each holder of Certificates entitled to payments of interest will be below that otherwise produced by the applicable Pass-Through Rate and purchase price of such Certificate because, while interest may accrue on each Qualified Asset during a certain period, the distribution of such interest will be made on a day which may be several days, weeks or months following the period of accrual. TIMING OF PAYMENT OF INTEREST Each payment of interest on the Certificates (or addition to the Certificate Balance of a class of Accrual Certificates) on a Distribution Date will include interest accrued during the Interest Accrual Period for such Distribution Date. As indicated above under "_The Pass- Through Rate," if the Interest Accrual Period ends on a date other than a Distribution Date for the related Series, the yield realized by the holders of such Certificates may be lower than the yield that would result if the Interest Accrual Period ended on such Distribution Date. The Interest Accrual Period for any Class of Certificates will be described in the related Prospectus Supplement. PAYMENTS OF PRINCIPAL; PREPAYMENTS The yield to maturity on the Certificates will be affected by the rate of principal payments on the Qualified Assets (including principal prepayments on Qualified Loans resulting from voluntary prepayments by the Mortgagors, insurance proceeds, condemnations and involuntary liquidations). A number of social, economic, geographic, climatic, demographic, tax, legal and other factors may influence the rate at which principal prepayments and defaults occur on the Qualified Loans including, without limitation, the age of the Qualified Loans, the payment terms of the Qualified Loans, the availability of mortgage credit, enforceability of due-on-sale clauses, servicing decisions, the extent of the borrower's net equity in the related Mortgaged Property, the characteristics of the borrowers, mortgage market interest rates in relation to the effective interest rates on the Qualified Loans and other unforeseeable variables, both domestic and international, affecting particular commodity groups and the farming industry in general. Generally, however, if prevailing interest rates fall significantly below the Mortgage Interest Rates on the Qualified Loans comprising or underlying the Qualified Assets in a particular Trust Fund, such Qualified Loans are likely to be the subject of higher principal prepayments than if prevailing rates remain at or above the rates borne by such Qualified Loans. In this regard, it should be noted that certain Qualified Assets may consist of Qualified Loans with different Mortgage Interest Rates and the stated pass-through or pay-through interest rate of certain QMBS may be a number of percentage points higher or lower than certain of the underlying Qualified Loans. The rate of principal payments on some or all of the classes of Certificates of a Series will correspond to the rate of principal payments on the Qualified Assets in the related Trust Fund and is likely to be affected by the existence of lock-out periods and prepayment premium provisions of the Qualified Loans underlying or comprising such Qualified Assets, and by the extent to which the servicer of any such Qualified Loan is able to enforce such provisions. Qualified Loans with a lock-out period or a prepayment premium provision, to the extent enforceable, generally would be expected to experience a lower rate of principal prepayments than otherwise identical Qualified Loans without such provisions, with shorter lock-out periods or with lower prepayment premiums. If the purchaser of a Certificate offered at a discount calculates its anticipated yield to maturity based on an assumed rate of distributions of principal that is faster than that actually experienced on the Qualified Assets, the actual yield to maturity will be lower than that so calculated. Conversely, if the purchaser of a Certificate offered at a premium calculates its anticipated yield to maturity based on an assumed rate of distributions of principal that is slower than that actually experienced on the Qualified Assets, the actual yield to maturity will be lower than that so calculated. In either case, if so provided in the Prospectus Supplement for a Series of Certificates, the effect on yield on one or more classes of the Certificates of such Series of prepayments of the Qualified Assets in the related Trust Fund may be mitigated or exacerbated by any provisions for sequential or selective distribution of principal to such classes. A prepayment of principal, whether full or partial, is applied so as to reduce the outstanding principal balance of the related Qualified Loan as of the Due Date next succeeding the date on which such prepayment is received. As a result, a prepayment on a Qualified Loan will not reduce the amount of interest passed through to holders of Certificates for each Interest Accrual Period. The timing of changes in the rate of principal payments on the Qualified Assets may significantly affect an investor's actual yield to maturity, even if the average rate of distributions of principal is consistent with an investor's expectation. In general, the earlier a principal payment is received on the Qualified Assets and distributed on a Certificate, the greater the effect on such investor's yield to maturity. The effect on an investor's yield of principal payments occurring at a rate higher (or lower) than the rate anticipated by the investor during a given period may not be offset by a subsequent like decrease (or increase) in the rate of principal payments. PREPAYMENTS, MATURITY AND WEIGHTED AVERAGE LIVES The rates at which principal payments are received on the Qualified Assets included in or comprising a Trust Fund for the related Series of Certificates may affect the ultimate maturity and the weighted average life of each class of such Series. Prepayments on the Qualified Loans comprising or underlying the Qualified Assets in a particular Trust Fund will generally accelerate the rate at which principal is paid on some or all of the classes of the Certificates of the related Series. As described in the related Prospectus Supplement for a Series of Certificates, each Class of Certificates will have a final scheduled Distribution Date, which is the date on or prior to which the Certificate Balance thereof is required to be reduced to zero, calculated on the basis of the assumptions applicable to such Series set forth therein. Payment of the entire Certificate Balance of each such Class no later than such final Distribution Date will be covered by the related Farmer Mac Guarantee. Weighted average life refers to the average amount of time that will elapse from the date of issue of a security until each dollar of principal of such security will be repaid to the investor. The weighted average life of a class of Certificates of a Series will be influenced by the rate at which principal on the Qualified Loans comprising or underlying the Qualified Assets is paid to such class, which may be in the form of scheduled amortization or prepayments (for this purpose, the term "prepayment" includes prepayments, in whole or in part, and liquidations due to default). In addition, the weighted average lives of the Certificates may be affected by the varying maturities of the Qualified Loans comprising or underlying the QMBS. If any Qualified Loans comprising or underlying the Qualified Assets in a particular Trust Fund have actual terms to maturity of less than those assumed in calculating final scheduled Distribution Dates for the Classes of Certificates of the related Series, one or more Classes of such Certificates may be fully paid prior to their respective final scheduled Distribution Dates, even in the absence of prepayments. Accordingly, the prepayment experience of the Qualified Assets will, to some extent, be a function of the mix of Mortgage Interest Rates and maturities of the Qualified Loans comprising or underlying such Qualified Assets. See "DESCRIPTION OF THE TRUST FUNDS" herein. Prepayments on loans are also commonly measured relative to a prepayment standard or model, such as the Constant Prepayment Rate ("CPR") prepayment model. CPR represents a constant assumed rate of prepayment each month relative to the then outstanding principal balance of a pool of loans for the life of such loans. Neither CPR nor any other prepayment model or assumption purports to be an historical description of prepayment experience or a prediction of the anticipated rate of prepayment of any pool of loans, including the Qualified Loans underlying or comprising the Qualified Assets. Moreover, CPR was developed based upon historical prepayment experience for single family residential mortgage loans. Thus, it is likely that prepayment of any Qualified Loans comprising or underlying the Qualified Assets for any Series will not conform to any particular level of CPR. The Depositor is not aware of any meaningful publicly available prepayment statistics for Qualified Loans secured by Agricultural Real Estate. The Prospectus Supplement with respect to each Series of Certificates may contain tables, if applicable, setting forth the projected weighted average life of each Class of Certificates of such Series and the percentage of the initial Certificate Balance of each such Class that would be outstanding on specified Distribution Dates based on the assumptions stated in such Prospectus Supplement, including assumptions that prepayments on the Qualified Loans comprising or underlying the related Qualified Assets are made at rates corresponding to various percentages of CPR or at such other rates specified in such Prospectus Supplement. Such tables and assumptions are intended to illustrate the sensitivity of weighted average lives of the Certificates to various prepayment rates and will not be intended to predict or to provide information that will enable investors to predict the actual weighted average lives of the Certificates. It is unlikely that prepayment of any Qualified Loans comprising or underlying the Qualified Assets for any Series will conform to any particular level of CPR or any other rate specified in the related Prospectus Supplement. THE DEPOSITOR Farmer Mac Mortgage Securities Corporation, the Depositor, is a wholly-owned subsidiary of Farmer Mac and was incorporated in the State of Delaware in May 1992. The principal executive offices of the Depositor are located at 919 18th Street, N.W., Washington, D.C. 20006. FEDERAL AGRICULTURAL MORTGAGE CORPORATION The Federal Agricultural Mortgage Corporation ("Farmer Mac") is a federally chartered instrumentality of the United States established by Title VIII of the Farm Credit Act of 1971, as amended (12 U.S.C. Section 2279aa et seq.) (the "Farmer Mac Charter"). Farmer Mac was established primarily to attract new capital for the financing of agricultural real estate and rural housing loans and to provide liquidity to agricultural real estate and rural housing lenders. Farmer Mac is intended to aid the development of a secondary market for agricultural real estate and rural housing loans made by participating originators (each, an "Originator"), secured by first liens on agricultural real estate, including rural housing, by guaranteeing the timely payment of interest and principal on obligations backed by such loans and securities representing interests in such loans or in the portion of loans guaranteed by the Secretary of Agriculture. Section 503 of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (the "1991 Act") provided for the creation of an Office of Secondary Market Oversight within the Farm Credit Administration ("FCA") that is managed by a full-time director selected by and reporting to the FCA Board. Through this office, the FCA has general regulatory and enforcement authority over Farmer Mac, including the authority to promulgate rules and regulations governing the activities of Farmer Mac and to apply its general enforcement powers to Farmer Mac and its activities. The 1991 Act also established certain minimum and critical capital levels for Farmer Mac. The 1996 Amendment signed into law by the President of the United States on February 10, 1996, modified the Farmer Mac Charter as it theretofore existed in several major respects, by, among other things (i) authorizing Farmer Mac to purchase Qualified Loans and to include such purchased Qualified Loans in Trust Funds serving as the basis for securities guaranteed by Farmer Mac, (ii) extending from December 1996 to December 1999 the statutory deadline for the full imposition of certain regulatory capital requirements applicable to Farmer Mac, and (iii) eliminating statutory requirements for credit support features aggregating not less than ten percent of the initial principal balances of Qualified Loans in a Trust Fund. The 1996 Amendment also made various statutory changes intended to further streamline program operations and clarify certain ambiguous statutory provisions. The 1996 Amendment also imposed certain additional capital requirements upon Farmer Mac and timing limitations therefor, including a requirement that Farmer Mac increase its core capital to at least $25 million. The 1996 amendment limits Farmer Mac's authority to conduct new business if the $25 million capital level is not reached within two years after the enactment of the 1996 Amendment. The Farmer Mac Charter authorizes Farmer Mac to borrow up to $1,500,000,000 from the Secretary of the Treasury, subject to certain conditions, to enable Farmer Mac to fulfill its guarantee obligations. The debt created by such borrowing will bear interest at a rate determined by the Secretary of the Treasury taking into consideration the average rate on outstanding marketable obligations of the United States as of the last day of the calendar month ending before the date of the purchase of such obligations. The debt must be repaid within a reasonable time. Public offerings of Farmer Mac Guaranteed Securities must be registered with the Commission pursuant to the Securities Act of 1933, as amended (the "1933 Act"). Farmer Mac is also subject to the periodic reporting requirements of the Exchange Act and, accordingly, files reports with the Commission pursuant thereto. Pursuant to existing FCA regulations, Farmer Mac is required to file quarterly and annual reports of condition with the FCA, as well as copies of all documents filed with the Commission under the 1933 and Exchange Acts. The Farmer Mac Charter requires the Comptroller General to perform a financial audit of Farmer Mac on whatever basis the Comptroller General determines to be necessary. Although Farmer Mac is an institution of the Farm Credit System, it is not liable for any debt or obligation of any other institution of the Farm Credit System (a "System Institution"). Neither the Farm Credit System nor any other individual System Institution is liable for any debt or obligation of Farmer Mac. Farmer Mac maintains its principal executive offices at 919 18th Street, N.W., Washington, D.C. 20006. Its telephone number is (202) 872-7700. DESCRIPTION OF THE CERTIFICATES GENERAL The Certificates of each Series (including any Class of Certificates not offered hereby) will represent the entire beneficial ownership interest in the Trust Fund created pursuant to the related Agreement. Each Series of Certificates will consist of one or more Classes of Certificates that may (i) provide for the accrual of interest thereon based on fixed, variable or floating rates; (ii) be entitled to principal distributions, with disproportionately low, nominal or no interest distributions (collectively, "Stripped Principal Certificates"); (iii) be entitled to interest distributions, with disproportionately low, nominal or no principal distributions (collectively, "Stripped Interest Certificates"); (iv) provide for distributions of accrued interest thereon commencing only following the occurrence of certain events, such as the retirement of one or more other Classes of Certificates of such Series (collectively, "Accrual Certificates"); (v) provide for payments of principal sequentially, based on specified payment schedules, from only a portion of the Trust Assets in such Trust Fund or based on specified calculations, to the extent of available funds, in each case as described in the related Prospectus Supplement; (vi) provide for distributions based on a combination of two or more components thereof with one or more of the characteristics described in this paragraph including a Stripped Principal Certificate component and a Stripped Interest Certificate component; and/or (vii) be entitled to distributions of any Prepayment Premiums and Yield Maintenance Charges (each term as defined herein), to the extent collected, in each case as described in the related Prospectus Supplement. Each Class of Certificates of a Series will be issued in minimum denominations corresponding to the Certificate Balances or, in case of Stripped Interest Certificates, notional amounts or percentage interests specified in the related Prospectus Supplement. The transfer of any Certificates may be registered and such Certificates may be exchanged without the payment of any service charge payable in connection with such registration of transfer or exchange, but the Depositor or the Trustee or any agent thereof may require payment of a sum sufficient to cover any tax or other governmental charge. One or more Classes of Certificates of a Series may be issued in definitive form ("Definitive Certificates") or in book-entry form ("Book-Entry Certificates"), as provided in the related Prospectus Supplement. See "RISK FACTORS -- Book-Entry Registration" and "DESCRIPTION OF THE CERTIFICATES -- Book-Entry Registration and Definitive Certificates" herein. Definitive Certificates will be exchangeable for other Certificates of the same Class and Series of a like aggregate Certificate Balance, notional amount or percentage interest but of different authorized denominations. DISTRIBUTIONS Distributions on the Certificates of each Series will be made by or on behalf of Farmer Mac on each Distribution Date as specified in the related Prospectus Supplement. Distributions (other than the final distribution) will be made to the persons in whose names the Certificates are registered at the close of business on the last business day of the month preceding the month in which the Distribution Date occurs (the "Record Date"), and the amount of each distribution will be determined as of the close of business on the date specified in the related Prospectus Supplement (the "Determination Date"). All distributions with respect to each Class of Certificates on each Distribution Date will be allocated pro rata among the outstanding Certificates in such Class or by random selection, as described in the related Prospectus Supplement or otherwise established by Farmer Mac. Payments will be made either by wire transfer in immediately available funds to the account of a Certificateholder at a bank or other entity having appropriate facilities therefor, if such Certificateholder has so notified the Trustee or other person required to make such payments no later than the date specified in the related Prospectus Supplement (and, if so provided in the related Prospectus Supplement, holds Certificates in the requisite amount specified therein), or by check mailed to the address of the person entitled thereto as it appears on the Certificate Register; provided, however, that the final distribution in retirement of Definitive Certificates will be made only upon presentation and surrender of the Certificates at the location specified in the notice to Certificateholders of such final distribution. All distributions on the Certificates of each Series on each Distribution Date will be made from the amount on deposit in the related Certificate Account on such Distribution Date as supplemented, to the extent necessary, by any amount paid by Farmer Mac under its guarantee. As described below, the entire amount on deposit will be distributed among the related Certificates or otherwise released from the Trust Fund on each Distribution Date, and accordingly will not be available for any future distributions. DISTRIBUTIONS OF INTETEST ON THE CERTIFICATES Each Class of Certificates (other than classes of Stripped Principal Certificates that have no Pass-Through Rate) may have a different Pass-Through Rate, which will be a fixed, variable or floating rate at which interest will accrue on such Class or a component thereof (the "Pass- Through Rate"). The related Prospectus Supplement will specify the Pass-Through Rate for each Class or component or, in the case of a variable or floating Pass-Through Rate, the method for determining the Pass-Through Rate. Distributions of interest in respect of the Certificates of any Class will be made on each Distribution Date (other than any Class of Accrual Certificates, which will be entitled to distributions of accrued interest commencing only on the Distribution Date, or under the circumstances, specified in the related Prospectus Supplement, and any Class of Stripped Principal Certificates that are not entitled to any distributions of interest) based on the Accrued Certificate Interest for such Class and such Distribution Date. Prior to the time interest is distributable on any Class of Accrual Certificates, the amount of Accrued Certificate Interest otherwise distributable on such Class will be added to the Certificate Balance thereof on each Distribution Date. With respect to each Class of Certificates and each Distribution Date (other than certain Classes of Stripped Interest Certificates), "Accrued Certificate Interest" will be equal to interest accrued for a specified period on the outstanding Certificate Balance thereof immediately prior to the Distribution Date, at the applicable Pass-Through Rate, reduced as described below. Accrued Certificate Interest on Stripped Interest Certificates will be equal to interest accrued for a specified period on the outstanding notional amount thereof immediately prior to each Distribution Date, at the applicable Pass-Through Rate, reduced as described below. The method of determining the notional amount for any class of Stripped Interest Certificates will be described in the related Prospectus Supplement. Reference to a notional amount is solely for convenience in certain calculations and does not represent the right to receive any distributions of principal. DISTRIBUTIONS OF PRINCIPAL ON THE CERTIFICATES The Certificates of each Series, other than certain classes of Stripped Interest Certificates, will have a "Certificate Balance" which, at any time, will equal the then maximum amount that the holder will be entitled to receive in respect of principal out of the future cash flow on the Qualified Assets and other assets included in the related Trust Fund. The outstanding Certificate Balance of a Certificate will be reduced to the extent of distributions of principal thereon from time to time and, in the case of Accrual Certificates prior to the Distribution Date on which distributions of interest are required to commence, will be increased by any related Accrued Certificate Interest. The initial aggregate Certificate Balance of all Classes of Certificates of a Series will not be greater than the outstanding aggregate principal balance of the related Qualified Assets as of the applicable Cut-off Date. The initial aggregate Certificate Balance of a Series and each Class thereof will be specified in the related Prospectus Supplement. Distributions of principal will be made on each Distribution Date to the Class or Classes of Certificates entitled thereto in accordance with the provisions described in such Prospectus Supplement until the Certificate Balance of such Class has been reduced to zero. Stripped Interest Certificates with no Certificate Balance are not entitled to any distributions of principal. DISTRIBUTIONS ON THE CERTIFICATES OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES If so provided in the related Prospectus Supplement, Prepayment Premiums or Yield Maintenance Charges that are collected on the Qualified Assets in the related Trust Fund may be distributed on each Distribution Date to the Class or Classes of Certificates entitled thereto in accordance with the provisions described in such Prospectus Supplement. ADVANCES IN RESPECT OF DELINQUENCIES With respect to any Series of Certificates evidencing an interest in a Trust Fund, the Central Servicer or another entity described therein will be required as part of its sub- servicing responsibilities to advance on or before each Certificate Account Deposit Date (generally a date ten days prior to the related Distribution Date) its own funds in an amount equal to the aggregate of payments of principal and interest (net of the related Central Servicer fee) that were due on the Qualified Loans in such Trust Fund and were delinquent on such Certificate Account Deposit Date, subject to such Central Servicer's (or another entity's) good faith determination that such advances (each, an "Advance") will be reimbursable from recoveries on the Qualified Loans respecting which such Advances were made (as to any Qualified Loan, "Related Proceeds"). Because Farmer Mac guarantees timely distributions of interest and principal on the Certificates to Holders, the failure of the Central Servicer to make any required Advance will not affect distributions of interest and principal to such Holders. The Prospectus Supplement for any Series of Certificates evidencing an interest in a Trust Fund that includes QMBS will describe any corresponding advancing obligation of any person in connection with such QMBS. REPORTS TO CERTIFICATEHOLDERS; PUBLICATION OF CERTIFICATE PRINCIPAL FACTORS With each distribution to holders of any Class of Certificates of a Series, the Master Servicer will forward or cause to be forwarded to each such holder, to the Trustee, the Depositor and to such other parties as may be specified in the related Agreement, a statement setting forth, in each case to the extent applicable and available: (i) the amount of such distribution to holders of Certificates of such Class allocable to principal, separately identifying the aggregate amount of any principal prepayments and, if so specified in the related Prospectus Supplement, any Prepayment Premiums or Yield Maintenance Charges included therein; (ii) the amount of such distribution to holders of Certificates of such Class allocable to Accrued Certificate Interest; (iii) the Certificate Principal Factor for each Class of Certificates (i.e., the percentage carried to eight places which, when multiplied by the denomination of a Certificate of such Class, will produce the Certificate Balance of such Certificate or, in the case of an Interest Only Certificate, the Notional Balance of such Certificate immediately following such Distribution Date); (iv) in the case of Certificates with a variable Pass-Through Rate, the Pass-Through Rate applicable to such Distribution Date, and, if available, the immediately succeeding Distribution Date, as calculated in accordance with the method specified in the related Prospectus Supplement; and (v) any other information required to be distributed to such parties as specified in the related Prospectus Supplement or Agreement. As soon as practicable following the fifth Business Day of each month during which a Distribution Date for a Series of Certificates occurs, Farmer Mac will calculate the Certificate Distribution Amount for such Distribution Date and will publish or otherwise make available for each Class of Certificates comprising such Series the Certificate Principal Factor therefor described in clause (iii) above. In the case of information furnished pursuant to subclauses (i) and (ii) above, the amounts shall be expressed as a dollar amount per minimum denomination of Certificates or for such other specified portion thereof. The Master Servicer or the Trustee, as specified in the related Prospectus Supplement, will forward or cause to be forwarded to each holder, to the Depositor and to such other parties as may be specified in the Agreements, a copy of any statements or reports received by the Master Servicer or the Trustee, as applicable, with respect to any QMBS. The Prospectus Supplement for each Series of Certificates will describe any additional information to be included in reports to the holders of such Certificates. Within a reasonable period of time after the end of each calendar year, the Master Servicer, shall furnish to each person who at any time during the calendar year was a holder of a Certificate a statement containing the information set forth in subclauses (i) and (ii) above, aggregated for such calendar year or the applicable portion thereof during which such person was a Certificateholder. Such obligation of the Master Servicer shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by the Master Servicer pursuant to any requirements of the Code as are from time to time in force. Unless and until Definitive Certificates are issued, or unless otherwise provided in the related Prospectus Supplement, such statements or reports will be forwarded by the Master Servicer to the Federal Reserve Bank of New York or the nominee for the private depository, as applicable. Such statements or reports may be available to Beneficial Owners upon request. In addition, the Trustee shall furnish a copy of any such statement or report to any Beneficial Owner which requests such copy and certifies to the Trustee or the Master Servicer, as applicable, that it is the Beneficial Owner of a Certificate. See "DESCRIPTION OF THE CERTIFICATES -- Book-Entry Registration and Definitive Certificates" herein. Communication among beneficial owners may be conducted through the facilities of the related depository or financial intermediary. TERMINATION The obligations created by the Trust Agreement for each Series of Certificates will terminate upon the payment to Certificateholders of that Series of all amounts required to be paid to them pursuant to such Trust Agreement following the earlier of (i) the final payment or other liquidation of the last Qualified Asset subject thereto, (ii) the purchase of all of the assets of the Trust Fund by the party entitled to effect such termination, under the circumstances and in the manner set forth in the related Prospectus Supplement and (iii) distribution by Farmer Mac pursuant to the Farmer Mac Guarantee on the Final Distribution Date of the latest maturing Class of such Series an amount sufficient to reduce the Certificate Balance thereof to zero. In no event, however, will any trust created by the Trust Agreement continue beyond a date which is 21 years subsequent to the death of the survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States to the Court of St. James', living on the Cut-off Date for the related Series. Written notice of termination of the Agreements will be given to each Certificateholder and the final distribution will be made only upon, in the case of any Definitive Certificate, presentation and surrender of such Definitive Certificate at the location to be specified in the notice of termination. If so specified in the related Prospectus Supplement, a Series of Certificates may be subject to optional early termination through the repurchase of the assets in the related Trust Fund by the party specified therein, under the circumstances and in the manner set forth therein. If so provided in the related Prospectus Supplement, upon the reduction of the Certificate Balance of a specified Class or Classes of Certificates by a specified percentage or amount, the party specified therein will solicit bids for the purchase of all assets of the Trust Fund, or of a sufficient portion of such assets to retire such Class or Classes or purchase such Class or Classes at a price set forth in the related Prospectus Supplement, in each case, under the circumstances and in the manner set forth therein. BOOK-ENTRY REGISTRATION AND DEFINITIVE CERTIFICATES If so provided in the related Prospectus Supplement, one or more Classes of the Certificates of any Series will be issued as Book-Entry Certificates, and each such Class will either (i) be issued and maintained only on the book-entry system of the Federal Reserve Banks (the "Fed System") or (ii) be represented by one or more single Certificates registered in the name of a nominee for the depository identified in the Prospectus Supplement (the "Depository"). THE FED SYSTEM Book-entry Certificates issued and maintained under the Fed System may be held of record only by entities eligible to maintain book-entry accounts with the Federal Reserve Banks. Such entities whose names appear on the book-entry records of the Federal Reserve Banks as the entities for whose accounts the Certificates have been deposited are herein referred to as "Holders" or "Certificateholders". A Holder is not necessarily the Beneficial Owner of a book-entry Certificate. Beneficial Owners will ordinarily hold book-entry Certificates through one or more financial intermediaries, such as banks, brokerage firms and securities clearing organizations. A Holder that is not the Beneficial Owner of a Certificate, and each other financial intermediary in the chain to the Beneficial Owner, will have the responsibility of establishing and maintaining accounts for their respective customers. The rights of the Beneficial Owner of a book- entry Certificate with respect to the applicable Trust Fund and the Federal Reserve Banks may be exercised only through the Holder of such Certificate. The Trustee and the Federal Reserve Banks will have no direct obligations to a Beneficial Owner of a book-entry Certificate that is not also the Holder of the Certificate. The Federal Reserve Banks will act only upon the instructions of the Holder in recording transfers of a book-entry Certificate. A Fiscal Agency Agreement between Farmer Mac and the Federal Reserve Bank of New York makes generally applicable to the book-entry Certificates (i) regulations governing Farmer Mac's use of the book-entry system and (ii) such procedures, insofar as applicable, as may from time to time be established by regulations of the United States Department of the Treasury governing United States securities, as now set forth in Treasury Department Circular Number 300, 31 C.F.R. Part 306 (other than Subpart O). The book-entry Certificates are also governed by applicable operating circulars and letters of the Federal Reserve Bank. A DEPOSITORY SYSTEM Any Depository will be a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code ("UCC") and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. The Depository will have been created to hold securities for its participating organizations ("Participants") and facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes in their accounts, thereby eliminating the need for physical movement of certificates. Participants include securities brokers and dealers, banks, trust companies and clearing corporations and may include certain other organizations. Indirect access to a Depository system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly ("Indirect Participants"). Generally, investors that are not Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Book-Entry Certificates may do so only through Participants and Indirect Participants. In addition, such investors ("Beneficial Owners") will receive all distributions on the Book-Entry Certificates through the Depository and its Participants. Under a book-entry format, Beneficial Owners will receive payments after the related Distribution Date because, while payments are required to be forwarded to the nominee, as nominee for the Depository, on each such date, the Depository will forward such payments to its Participants which thereafter will be required to forward them to Indirect Participants or Beneficial Owners. So long as a Certificate is in book-entry form, the only "Certificateholder" (as such term is used in the Agreement) will be the nominee for the Depository, and the Beneficial Owners will not be recognized by the Trustee as Certificateholders under the Agreements. Beneficial Owners will be permitted to exercise the rights of Certificateholders under the related Agreements only indirectly through the Participants who in turn will exercise their rights through the Depository. Under the rules, regulations and procedures creating and affecting the Depository and its operations, the Depository is required to make book-entry transfers among Participants on whose behalf it acts with respect to the Book-Entry Certificates and is required to receive and transmit distributions of principal of and interest on the Book-Entry Certificates. Participants and Indirect Participants with which Beneficial Owners have accounts with respect to the Book-Entry Certificates similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Beneficial Owners. Because the Depository can act only on behalf of Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a Beneficial Owner to pledge its interest in the Book-Entry Certificates to persons or entities that do not participate in the Depository system, or otherwise take actions in respect of its interest in the Book-Entry Certificates, may be limited due to the lack of a physical certificate evidencing such interest. The Depository has advised the Depositor that it will take any action permitted to be taken by a Certificateholder under an Agreement only at the direction of one or more Participants to whose account with the Depository interests in the Book-Entry Certificates are credited. Under the Depository's procedures, the Depository will take actions permitted to be taken by Holders of any class of Book-Entry Certificates only at the direction of one or more Participants to whose account the Book-Entry Certificates are credited and whose aggregate holdings represent no less than any minimum amount of Voting Rights required therefor. Therefore, Beneficial Owners will only be able to exercise their Voting Rights to the extent permitted, and subject to the procedures established, by their Participant and/or Indirect Participant, as applicable. The Depository may take conflicting actions with respect to any action of Certificateholders of any Class to the extent that Participants authorize such actions. Neither of the Master Servicer, the Depositor, the Trustee or any of their respective affiliates will have any liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Book-Entry Certificates, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Certificates initially issued in book-entry form will be issued in fully registered, certificated form to Beneficial Owners or their nominees ("Definitive Certificates"), rather than to the Depository or its nominee only if (i) the Depositor advises the Trustee in writing that the Depository is no longer willing or able to properly discharge its responsibilities as depository with respect to the Certificates and the Depositor is unable to locate a qualified successor or (ii) the Depositor, at its option, elects to terminate the book-entry system through the Depository. Upon the occurrence of either of the events described in the immediately preceding paragraph, the Depository is required to notify all Participants of the availability through the Depository of Definitive Certificates for the Beneficial Owners. Upon surrender by the Depository of the certificate or certificates representing the Book-Entry Certificates, together with instructions for reregistration, the Trustee will issue (or cause to be issued) to the Beneficial Owners identified in such instructions the Definitive Certificates to which they are entitled, and thereafter the Trustee will recognize the holders of such Definitive Certificates as Certificateholders under the Trust Agreement. DESCRIPTION OF THE AGREEMENTS The Certificates of each Series evidencing interests in a Trust Fund will be issued pursuant to a Trust Agreement among the Depositor, Farmer Mac and the Trustee. If Qualified Loans are included in a Trust Fund, Farmer Mac will be responsible for the servicing of such Qualified Loans through one or more Central Servicers acting pursuant to Servicing Contracts between the Central Servicer and Farmer Mac. In addition, each Seller of Qualified Assets to the Depositor for the purpose of depositing such Qualified Assets into the Trust Fund will transfer and assign such Qualified Assets to the Depositor pursuant to a separate Sale Agreement between the Depositor, Farmer Mac and such Seller. Each such Sale Agreement will include certain representations and warranties of the Seller respecting the related Qualified Assets which representations and warranties and the remedies for their breach will be assigned to the Trustee for the benefit of Certificateholders pursuant to the Trust Agreement for the related Series of Certificates. The Trust Agreement, any Servicing Contract and each Sale Agreement relating to a particular Series of Certificate are herein collectively referred to as the "Agreements". The provisions of each Agreement will vary depending upon the nature of the Certificates to be issued thereunder and the nature of the related Trust Fund. Forms of a Trust Agreement, a Servicing Contract and a Sale Agreement have been filed as an exhibit to the Registration Statement of which this Prospectus is a part. The following summaries describe certain provisions that may appear in each Agreement. The Prospectus Supplement for a Series of Certificates will describe any provision of the Agreements relating to such Series that materially differs from the description thereof contained in this Prospectus. The summaries do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Agreements for each Trust Fund and the description of such provisions in the related Prospectus Supplement. As used herein with respect to any Series, the term "Certificate" refers to all of the Certificates of that Series, whether or not offered hereby and by the related Prospectus Supplement, unless the context otherwise requires. The Depositor will provide a copy of the Agreements (without exhibits) relating to any Series of Certificates without charge upon written request of a holder of a Certificate of such Series addressed to the Trustee specified in the related Prospectus Supplement. ASSIGNMENT OF ASSETS; REPURCHASES At the time of issuance of any Series of Certificates, the Depositor will assign (or cause to be assigned) to the designated Trustee the Trust Assets to be included in the related Trust Fund, together with all principal and interest to be received on or with respect to such Trust Assets after the Cut-off Date, other than principal and interest due on or before the Cut-off Date. The Trustee will, concurrently with such assignment, deliver the Certificates to the Depositor in exchange for the Trust Assets and the other assets comprising the Trust Fund for such Series. Each Qualified Asset will be identified in a schedule appearing as an exhibit to the related Agreement. Such schedule will include detailed information (i) in respect of each Qualified Loan included in the related Trust Fund, including without limitation, the address of the related Mortgaged Property and type of such property, the Mortgage Interest Rate and, if applicable, the applicable index, margin, adjustment date and any rate cap information, the original and remaining term to maturity and the original and outstanding principal balance, and (ii) in respect of each QMBS included in the related Trust Fund, including without limitation, the QMBS Issuer, QMBS Servicer and QMBS Trustee, the pass-through or bond rate or formula for determining such rate, the issue date and original and remaining term to maturity, if applicable, the original and outstanding principal amount and payment provisions, if applicable. With respect to each Qualified Loan, the Depositor will deliver or cause to be delivered to the Trustee (or to the custodian hereinafter referred to) certain loan documents, which will (unless the Qualified Loan is evidenced by a participation certificate) include the original Mortgage Note endorsed, without recourse, in blank or to the order of the Trustee, the original Mortgage (or a certified copy thereof) with evidence of recording indicated thereon and an assignment of the Mortgage to the Trustee in recordable form. The related Agreements will require that the Depositor or another party specified therein promptly cause each such assignment of Mortgage to be recorded in the appropriate public office for real property records. The Trustee (or a custodian) will review such Qualified Loan documents within a specified period of days after receipt thereof, and the Trustee (or a custodian) will hold such documents in trust for the benefit of the Certificateholders. If any such document is found to be missing or defective in any material respect, the Trustee (or such custodian) shall immediately notify Farmer Mac and the Seller. If the Seller cannot cure the omission or defect within a specified number of days after receipt of such notice, then the Seller will be obligated, within a specified number of days of receipt of such notice, to repurchase the related Qualified Loan from the Trustee at the Purchase Price or substitute for such Qualified Loan. With respect to each QMBS in certificated form, the Depositor will deliver or cause to be delivered to the Trustee (or the custodian) the original certificate or other definitive evidence of such QMBS together with bond power or other instruments, certifications or documents required to transfer fully such QMBS to the Trustee for the benefit of the Certificateholders. With respect to each QMBS in uncertificated or book-entry form or held through a "clearing corporation" within the meaning of the UCC, the Depositor and the Trustee will cause such QMBS to be registered directly or on the books of such clearing corporation or of a financial intermediary in the name of the Trustee for the benefit of the Certificateholders. The related Agreement will require that either the Depositor or the Trustee promptly cause any QMBS in certificated form not registered in the name of the Trustee to be re-registered, with the applicable persons, in the name of the Trustee. REPRESENTATIONS AND WARRANTIES; REPURCHASES There will be assigned to the Trustee pursuant to each Trust Agreement the representations and warranties of the Seller in the related Sale Agreement, as of a specified date covering, by way of example, the following types of matters: (i) the accuracy of the information set forth for each Qualified Loan on the schedule of Qualified Assets appearing as an exhibit to such Trust Agreement; (ii) the existence of title insurance insuring the lien priority of the Qualified Loan; (iii) the authority of the Seller to sell the Qualified Loan; (iv) the payment status of the Qualified Loan and the status of payments of taxes, assessments and other charges affecting the related Mortgaged Property; (v) the status of such Qualified Loan as a "Qualified Loan" under the Act and its conformity in all material respects with the Guides and (vi) the existence of customary provisions in the related Mortgage Note and Mortgage to permit realization against the Mortgaged Property of the benefit of the security of the Mortgage. Unless otherwise specified in the related Sale Agreement, in the event of a material breach of any such representation or warranty, the related Seller will be obligated either cure such breach or repurchase or replace the affected Qualified Loan as described below. Since the representations and warranties may not address events that may occur following the date as of which they were made, the Seller will have a cure, repurchase or substitution obligation in connection with a breach of such a representation and warranty only if the relevant event that causes such breach occurs prior to such date. Such party would have no such obligations if the relevant event that causes such breach occurs after such date. The Agreements will provide that the Master Servicer and/or Trustee will be required to notify promptly the relevant Seller of any breach of any representation or warranty made by it in respect of a Qualified Loan that materially and adversely affects the value of such Qualified Loan or the interests therein of the Certificateholders. If such Seller cannot cure such breach within a specified period following the date on which it was notified of such breach, then such Seller will be obligated to repurchase such Qualified Loan from the Trustee within a specified period from the date on which the Seller was notified of such breach, at the Purchase Price therefor. As to any Qualified Loan, the "Purchase Price" is equal to the sum of the unpaid principal balance thereof, plus unpaid accrued interest thereon at the Mortgage Interest Rate from the date as to which interest was last paid to the due date in the Due Period in which the relevant purchase is to occur, plus certain servicing expenses that are reimbursable to the Master Servicer and Central Servicer. A Seller's repurchase of a Qualified Loan will not include payment of any Prepayment Premium or Yield Maintenance Charge. A Seller, rather than repurchase a Qualified Loan as to which a breach has occurred, will have the option, within two years after initial issuance of the related Series of Certificates, to cause the removal of such Qualified Loan from the Trust Fund and substitute in its place one or more other Qualified Loans, in accordance with standards designed to assure that any such substitution will not materially alter the characteristics of the related Trust Fund. Neither the Depositor nor Farmer Mac will be obligated to purchase or substitute for a Qualified Loan if a Seller defaults on its obligation to do so, and no assurance can be given that Sellers will carry out such obligations with respect to Qualified Loans. Any resultant loss to a Trust Fund which would result in a deficiency in any required distribution to Certificateholders will be covered by the Farmer Mac Guarantee. As such, Certificateholders will suffer no loss by reason of any such Seller default. The Seller will, with respect to a Trust Fund that includes QMBS, make certain representations or warranties, as of a specified date, with respect to such QMBS, covering (i) the accuracy of the information set forth therefor on the schedule of Qualified Assets appearing as an exhibit to the related Agreement and (ii) the authority of the Seller to sell such Qualified Assets. ACCOUNTS General In each Servicing Contract, Farmer Mac will require the related Central Servicer to establish and maintain one or more separate accounts in the name of the Trustee for the collection of payments on the related Qualified Assets (collectively, the "Collection Account"), which must be an account or accounts with the Trustee or with any other depository institution or trust company approved in writing by Farmer Mac incorporated under the laws of the United States or any state thereof and subject to supervision and examination by federal or state banking authorities (an "Eligible Depository"). Each Collection Account may be maintained as an interest bearing or a non-interest bearing account and the funds held therein may be invested pending each succeeding Distribution Date in certain short-term direct obligations of, and obligations fully guaranteed by, the United States, Farmer Mac or any other agency or instrumentality of the United States or any other obligation or security approved by Farmer Mac ("Eligible Investments"). Any interest or other income earned on funds in a Collection Account will be paid to Farmer Mac or the related Central Servicer or its designee as additional servicing compensation and the risk of loss of funds in a Collection Account resulting from such investments will be borne by Farmer Mac or such Central Servicer, as the case may be. The amount of such loss will be required to be deposited by Farmer Mac or such Central Servicer in the related Collection Account immediately as realized. Deposits The Central Servicer will deposit or cause to be deposited in a Collection Account the following payments and collections received, or Advances made, by it: (i) all payments on account of principal, including principal prepayments, on the Qualified Assets; (ii) all payments on account of interest on the Qualified Assets, including any default interest collected, in each case net of any portion thereof retained by a Central Servicer as its servicing compensation; (iii) all proceeds of any insurance policies ("Insurance Proceeds") to be maintained in respect of each Mortgaged Property securing a Qualified Loan in the Trust Fund (to the extent such proceeds are not applied to the restoration of the property or released to the Mortgagor in accordance with the normal servicing procedures of a Central Servicer, subject to the terms and conditions of the related Mortgage and Mortgage Note) and all other amounts received and retained in connection with the liquidation of defaulted Qualified Loans in the Trust Fund, by foreclosure, condemnation or otherwise ("Liquidation Proceeds"); (iv) any Advances made as described under "DESCRIPTION OF THE CERTIFICATES -- Advances in Respect of Delinquencies"; (v) to the extent required to be distributed to Certificateholders, any amounts representing Prepayment Premiums and Yield Maintenance Charges; and (vi) proceeds from the operation of foreclosed Mortgaged Properties held in the Trust Fund ("REO Proceeds"). Withdrawals All such deposits in a Collection Account will, unless otherwise specified in the Prospectus Supplement, be net of the following amounts to be retained by the Central Servicer: (i) amounts to reimburse the Central Servicer for unreimbursed amounts advanced as described under "DESCRIPTION OF THE CERTIFICATES -- Advances in Respect of Delinquencies" such reimbursement to be made out of amounts received which were identified and applied by such Central Servicer as late collections of interest on and principal of the particular Qualified Loans with respect to which the Advances were made; (ii) amounts to reimburse the Central Servicer for unpaid servicing fees earned and certain unreimbursed servicing expenses incurred with respect to Qualified Loans and properties acquired in respect thereof, such reimbursement to be made out of amounts that represent Liquidation Proceeds and Insurance Proceeds collected on the particular Qualified Loans and properties, and REO Proceeds collected on the particular properties, with respect to which such fees were earned or such expenses were incurred; (iii) amounts to reimburse the Central Servicer for any Advances described in clause (i) above and any servicing expenses described in clause (ii) above which, in the Central Servicer's good faith judgment, will not be recoverable from the amounts described in clauses (i) and (ii), respectively, such reimbursement to be made from amounts collected on other Trust Assets; and (iv) to make any other withdrawals permitted by the related Agreement and described in the related Prospectus Supplement. On or before the issuance of a Series of Certificates, Farmer Mac is required to either (i) open with an Eligible Depository one or more trust accounts in the name of the Trustee applicable to the related Trust Fund (collectively, the "Certificate Account") or (ii) in lieu of maintaining any such account or accounts, maintain the Certificate Account for the related Trust Fund by means of appropriate entries on Farmer Mac's books and records designating all amounts credited thereto in respect of the related Qualified Assets as being held by it for the related Holders of Certificates evidencing beneficial ownership of such Trust Fund. To the extent that the Certificate Account for any Trust Fund is maintained by Farmer Mac in the manner provided in (ii) above, all references herein to deposits and withdrawals from the Certificate Account shall be deemed to refer to credits and debits to the related books of Farmer Mac. On or before a date (the "Certificate Account Deposit Date") which, for each Trust Fund, will be approximately ten days before each Distribution Date, the related Central Servicer will be required to withdraw from the applicable Collection Account and remit to Farmer Mac for deposit in the Certificate Account all funds held therein (other than amounts relating to future Distribution Dates). In the event that the amount so remitted on or before a Certificate Account Deposit Date is less than the Certificate Distribution Amount for the related Distribution Date previously calculated by Farmer Mac, Farmer Mac is required by the Trust Agreement to provide to the Trustee an Officer's Certificate stating (i) the amount of such insufficiency, (ii) whether Farmer Mac has determined that funds will be available to it on such Distribution Date in an amount sufficient to cure such insufficiency pursuant to its guarantee of the related Certificates without the necessity of borrowing from the United States Treasury and (iii) in the event the response to (ii) above is in the negative, attaching to such Officer's Certificate a copy of the certification furnished to the Secretary of the Treasury requesting that funds in the necessary amount be made available to Farmer Mac on or before such Distribution Date for purposes of satisfying its guarantee obligations. Amounts on deposit in the Certificate Account on a Distribution Date for a Series will be withdrawn by Farmer Mac in the amount required, to the extent funds are available therefor for application as follows: (i) towards the distribution to Certificateholders in Federal Funds of the Certificate Distribution Amount for such Distribution Date; (ii) to the reimbursement to Farmer Mac of any amount previously paid by it in respect of such Series pursuant to its guarantee of the related Certificates; (iii) to the payment of any portion of the Guarantee Fee for such Distribution Date or any prior Distribution Date which has not otherwise been paid (the method of calculating each such Guarantee Fee being set forth in the related Prospectus Supplement); and (iv) to the payment to Farmer Mac of any amounts remaining in the Certificate Account after the withdrawals referred to in clauses (i) through (iii) above, any such amounts being deemed to be payable to Farmer Mac as compensation for its master servicing activities and to the reimbursement of expenses incurred by it in connection therewith. COLLECTION AND OTHER SERVICING PROCEDURES Collection Procedures Each Servicing Contract will provide that the Central Servicer will, consistent with the Guides, make reasonable efforts to collect all payments called for under the terms and provisions of the Qualified Loans. Consistent with the above, the Central Servicer may in its discretion waive, postpone, reschedule, modify or otherwise compromise the terms of payment of any Qualified Loan so long as any such waiver, postponement, rescheduling, modification or compromise is not inconsistent with the then current policies of Farmer Mac or customary practice in the agriculture real estate mortgage servicing industry. Any required adjustment to the payment schedule of any Qualified Loan as a result of the foregoing will not affect the computation of the amount due on the Certificates under the formula applicable thereto, subject to any exceptions set forth in the related Prospectus Supplement. As part of its servicing activities, the Central Servicer may, but is not required to, enforce any due-on-sale or due-on-encumbrance clause contained in any Mortgage Note or Mortgage, in accordance with the provisions of such Mortgage Note or Mortgage and in the best interests of the Certificateholders. In cases in which the Mortgaged Property is to be conveyed to a person by a borrower and such person enters into an assumption agreement or a substitution agreement, pursuant to which a new borrower is substituted for the existing borrower, the Central Servicer is obligated to take reasonable steps in conformity with applicable law to assure that (i) the Qualified Loan will continue to be secured by a first mortgage lien pursuant to the terms of the Mortgage, (ii) no material term including, but not limited to, the Mortgage Interest Rate and any term affecting the amount or timing of payment will be altered, nor will the term of the Qualified Loan be increased, and (iii) if the seller/transferor of the Mortgaged Property is to be released from liability on the Qualified Loan, such release will not adversely affect the collectability of the Qualified Loan. Realization Upon Defaulted Qualified Loans Subject to the conditions set forth in the Servicing Contract, the Central Servicer is required to foreclose upon or otherwise comparably convert the ownership of properties securing such of the Qualified Loans as come into and continue in default and as to which no arrangements consistent with the Guides have been made for collection of delinquent payments. Borrowers who do not wish to proceed through foreclosure may assign the deed of their Mortgaged Property to the Trust Fund with the consent of the Central Servicer. The Central Servicer will then take the appropriate steps to liquidate the property and pay off the Qualified Loan. In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale will be issued to the Trustee or to its nominee on behalf of Certificateholders. Notwithstanding any such acquisition of title and cancellation of the related Qualified Loan, such Qualified Loan will be considered for purposes of calculation of amounts due on the Certificates under any formula applicable thereto to be an outstanding Qualified Loan held in the Trust Fund until such time as the Mortgaged Property is sold and such Qualified Loan becomes a liquidated Qualified Loan. The Central Servicer is required to dispose of any Mortgaged Property in accordance with applicable local and environmental laws and, to the extent applicable, consistent with the status of the Trust as a REMIC. Compensation and Payment of Expenses The Central Servicer will receive an annualized fee (the "Central Servicing Fee") payable out of the interest payments received on each Qualified Loan equal to the Central Servicing Fee Rate described in the related Prospectus Supplement multiplied by the outstanding principal balance of each Qualified Loan on which a payment is made with respect to the related Distribution Date. The Trustee will receive a fee for services rendered in its capacity as Trustee, payable by Farmer Mac. Accordingly, the amount of such compensation with respect to the Certificates will decrease as the Qualified Loans amortize, and will be affected by principal prepayments on the Qualified Loans. The Central Servicer will be entitled to retain all assumption fees, late payment charges and other charges (other than, to the extent required to be distributed to Certificateholders, Prepayment Premiums or Yield Maintenance Charges), to the extent collected from borrowers and as described in the Servicing Contract, as well as any earnings on the investment of funds held by it pending remittance to Farmer Mac for deposit in the Certificate Account unless otherwise provided in the related Servicing Contract. The Central Servicer will also be entitled to reimbursement for certain expenses incurred by it in connection with the liquidation of defaulted Qualified Loans including, under certain circumstances, reimbursement of expenditures incurred in connection with the preservation of the related Mortgaged Properties. Certain Matters Regarding Farmer Mac The Trust Agreement provides that Farmer Mac may not resign from its obligations and duties thereunder. The Trust Agreement will also provide that neither Farmer Mac nor the Depositor nor any of their respective directors, officers, employees or agents will be under any liability for any action taken or for refraining from the taking of any action in good faith pursuant to the Trust Agreement, or for errors in judgment; provided, however, that neither Farmer Mac nor the Depositor will be protected against any liability which would otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the performance of duties or by reason of willful disregard of obligations and duties thereunder. In addition, the Trust Agreement will provide that neither Farmer Mac nor the Depositor will be under any obligation to appear in, prosecute or defend any legal action which is not incidental to their responsibilities under the Trust Agreement and which in their opinion may involve them in any expense or liability. Farmer Mac and the Depositor may, however, in their discretion undertake any such action which they may deem necessary or desirable with respect to the Trust Agreement and the rights and duties of the parties thereto and the interests of the Certificateholders thereunder. EVENTS OF DEFAULT Events of Default under the Trust Agreement will consist of (i) any failure by Farmer Mac to distribute to Holders of Certificates of any Class in the related Trust Fund any distribution required to be made under the terms of the related Trust Agreement (including, for this purpose, pursuant to the Farmer Mac Guarantee) which continues unremedied for a period of five days after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac by the the Trustee or to Farmer Mac and the Trustee by the Holders of Certificates of such Class having Certificate Balances or Notional Balances aggregating not less than 5% of the aggregate of the Certificate Balances or Notional Balances of all of the Certificates of such Class, (ii) failure on the part of Farmer Mac duly to observe or perform in any material respect any other of the covenants or agreements on the part of Farmer Mac in the Trust Agreement which continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac and the Trustee by the Holders of Certificates of any Class in the related Trust Fund having Certificate Balances or Notional Balances aggregating not less than 25% of the aggregate of the Certificate Balances or Notional Balances of all of the Certificates of such Class, and (iii) certain events of insolvency, readjustment of debt, marshalling of assets and liabilities of similar proceedings regarding Farmer Mac and certain actions by the Master Servicer indicating its insolvency or inability to pay its obligations. RIGHTS UPON EVENT OF DEFAULT So long as an Event of Default remains unremedied, the Trustee or the Holders of Certificates of any Class in the related Trust Fund having Certificate Balances or Notional Balances aggregating not less than 25% of the aggregate of the Certificate Balances or Notional Balance of such Class may (a) terminate all obligations and duties imposed upon Farmer Mac (other than its obligations under the Farmer Mac Guarantee) under the Trust Agreement, and (b) name and appoint a successor or successors to succeed to and assume all of such obligations and duties. Such actions shall be effected by notice in writing to Farmer Mac and shall become effective upon receipt of such notice by Farmer Mac and the acceptance of such appointment by such successor or successors. Because the Trustee is required to give notice to Farmer Mac of any failure to make a required distribution, the Holders' failure to give such notice will not result in a waiver of the remedies available upon default. AMENDMENT The Trust Agreement may be amended by the respective parties thereto without the consent of any of the holders of Certificates (i) to cure any ambiguity, (ii) to correct or supplement any provision therein which may be defective or inconsistent with any other provision therein or (iii) to make any other provisions with respect to matters or questions arising under the Trust Agreement which are not materially inconsistent with the provisions thereof, provided that any such amendment described in this clause (iii) will not adversely affect in any material respect the interests of any Certificateholder. With the consent of the Holders of Certificates of each Class in the related Trust Fund having Certificate Balances and Notional Balances aggregating not less than 66% of the aggregate of the Certificate Balances or Notional Balances, as applicable, of all of the Certificates of such Class, (i) compliance by Farmer Mac with any of the terms of the related Trust Agreement may be waived or (ii) Farmer Mac may enter into any supplemental agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of such Trust Agreement or of modifying in any manner the rights of the Holders of the Certificates issued under such Trust Agreement; provided that no such waiver or supplemental agreement shall: (a) without the consent of all Certificateholders affected thereby reduce in any manner the amount of, or delay the timing of, distributions which are required to be made on any Certificate; or (b) without the consent of all Certificateholders (i) terminate or modify the Farmer Mac Guarantee with respect to the Certificates of such Series, or (ii) reduce the aforesaid percentages of Certificates, the Holders of which are required to consent to any waiver or any supplemental agreement. Notwithstanding the foregoing, the Trustee will not be entitled to consent to any such amendment without having first received an Opinion of Counsel, to the extent applicable, to the effect that such amendment will not cause the Trust Fund to fail to qualify as a REMIC. THE TRUSTEE The Trustee under each Trust Agreement will be named in the related Prospectus Supplement. The commercial bank, national banking association, banking corporation or trust company serving as Trustee may have a banking relationship with Farmer Mac and its affiliates and with any Central Servicer and its affiliates. DUTIES OF THE TRUSTEE The Trustee will make no representations as to the validity or sufficiency of any Agreement, the Certificates or any Trust Asset or related document and is not accountable for the use or application by or on behalf of any Central Servicer or Farmer Mac of any funds paid to such Central Servicer or Farmer Mac in respect of the Certificates or the Trust Assets, or deposited into or withdrawn from any Account or any other account by or on behalf of any Central Servicer or Farmer Mac. If no Event of Default has occurred and is continuing, the Trustee is required to perform only those duties specifically required under the related Agreement. However, upon receipt of the various certificates, reports or other instruments required to be furnished to it, the Trustee is required to examine such documents and to determine whether they conform to the requirements of the Agreement. CERTAIN MATTERS REGARDING THE TRUSTEE The Trustee and any director, officer, employee or agent of the Trustee shall be entitled to indemnification out of the Trust Fund for any loss or liability incurred without negligence or bad faith in connection with the Trustee's acceptance or administration of the trusts created by the related Trust Agreement. RESIGNATION AND REMOVAL OF THE TRUSTEE The Trustee may at any time resign from its obligations and duties under an Agreement by giving written notice thereof to Farmer Mac. Upon receiving such notice of resignation, Farmer Mac is required promptly to 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. If at any time the Trustee shall cease to be eligible to continue as such under the related Agreement, or if at any time the Trustee shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then Farmer Mac may remove the Trustee and appoint a successor trustee. Any resignation or removal of the Trustee and appointment of a successor trustee shall not become effective until acceptance of appointment by the successor trustee. CERTAIN LEGAL ASPECTS OF QUALIFIED LOANS AND OTHER MATTERS The following discussion contains summaries of certain legal aspects of mortgage loans, including the Qualified Loans, that are general in nature. Because such legal aspects are governed in part by applicable state law (which laws may differ substantially), the summaries do not purport to be complete nor to reflect the laws of any particular state nor to encompass the laws of all states in which the Mortgaged Properties may be situated. The summaries are qualified in their entirety by reference to the applicable federal and state laws governing the Qualified Loans. GENERAL The Qualified Loans will be evidenced by promissory notes, collectively referred to as "Mortgage Notes," and secured by either deeds of trust or mortgages, depending upon the prevailing practice in the state in which the property subject to a Qualified Loan is located. A mortgage creates a lien upon the real property encumbered by the mortgage. Foreclosure of a mortgage is generally accomplished by judicial action. Foreclosure of a deed of trust is generally accomplished by a non-judicial trustee's sale under a specific provision in the deed of trust which authorizes the trustee to sell the property to a third party upon any default by the borrower under the terms of the note or deed of trust. In some states, after sale pursuant to a deed of trust or foreclosure of a mortgage, the borrower and foreclosed junior lienors are given a statutory period in which to redeem the property from the foreclosure sale. The effect of a statutory right of redemption is to diminish the ability of the lender to sell the foreclosed property in a timely manner. Certain states have imposed statutory prohibitions which limit the remedies of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some states, statutes limit the right of the beneficiary or mortgagee to obtain a deficiency judgment against the borrower following foreclosure or sale under a deed of trust. In addition to laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including the federal bankruptcy laws and state laws affording relief to debtors, may interfere with or affect the ability of the secured mortgage lender to realize upon collateral or enforce a deficiency judgment. Courts with federal bankruptcy jurisdiction have also indicated that the terms of a mortgage loan secured by property of the debtor may be modified. These courts have suggested that such modifications may include reducing the amount of each monthly payment, changing the rate of interest, altering the repayment schedule, and reducing the lender's security interest to the value of the residence, thus leaving the lender a general unsecured creditor for the difference between the value of the residence and the outstanding balance of the loan. The federal bankruptcy code also includes provisions under which a "family farmer with regular annual income" is permitted to file and obtain confirmation of a plan on an expedited basis, and protections for such debtors that are not available to other types of debtors. Federal bankruptcy laws and applicable state laws may also limit the ability to enforce any assignment by a borrower of rents and leases related to a Mortgaged Property. The Code provides priority to certain tax liens over the lien of a mortgage. In addition, substantive requirements are imposed upon mortgage lenders in connection with the origination and servicing of mortgage loans by numerous federal and some state consumer protection laws. These laws include the federal Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and related statutes. These federal laws impose specific statutory liabilities upon lenders who originate mortgage loans and who fail to comply with the provisions of the law. In some cases, this liability may affect assignees of the mortgage loans. BORROWER'S RIGHTS LAWS APPLICABLE TO AGRICULTURAL MORTGAGE LOANS Farm Credit Act In general, borrowers with loans, including mortgage loans, from lenders which are institutions of the Farm Credit System, are entitled to certain rights under Sections 4.14, 4.14A, 4.14B, 4.14C and 4.37 of the Farmer Mac Charter. These rights include restructuring and favorable treatment of certain borrower money held by the lender in case of the liquidation of the lender. Section 8.9 of the Farmer Mac Charter provides that the right as conferred under such Sections 4.14, 4.14A, 4.14B, 4.14C and 4.37 are not applicable to any Qualified Loan. Certain State Laws Certain states have enacted legislation granting certain rights to borrowers under agricultural mortgage loans. These rights may include, among others, restructuring of loans, mediation prior to foreclosure, moratoria on foreclosures or payments, access by a dispossessed borrower to previously planted crops, redemption provisions that are more favorable to farm borrowers than to other commercial borrowers and restrictions on disposition of agricultural property acquired through foreclosure. Section 8.6(d)(7) of the Farmer Mac Charter specifically provides that such rights apply to Qualified Loans. Section 8.6(d)(7) allows a Seller or Farmer Mac to require discounts or charge fees reasonably related to costs and expenses arising from such borrowers' rights provisions but prohibits a Seller or Farmer Mac from refusing to purchase such Qualified Loans. Sellers will represent and warrant in Sales Agreements that each Qualified Loan was originated in compliance with applicable state laws in all material respects and that no homestead exemption is available to the borrower unless the value of the portion of the Mortgaged Property not subject to a homestead exemption would result in a current loan-to-value ratio of not more than 70%. ENVIRONMENTAL LEGISLATION Under the federal Comprehensive Environmental Response Compensation and Liability Act, as amended, and under state law in certain states, a secured party which takes a deed in lieu of foreclosure, purchases a mortgaged property at a foreclosure sale or is deemed to have participated in the management or operation of a mortgage property may become liable in certain circumstances for the costs of remedial action ("Cleanup Costs") if hazardous wastes or hazardous substances have been released or disposed of on the property. Such Cleanup Costs may be substantial. It is possible that such Cleanup Costs could become a liability of the Trust Fund and reduce the amounts otherwise distributable to the Certificateholders if a Mortgaged Property securing a Qualified Loan became the property of the Trust Fund in certain circumstances or if the Trust Fund is deemed to have participated in the management or operation of such property and if such Cleanup Costs were incurred. Moreover, certain states by statute impose a lien for any Cleanup Costs incurred by such state on the property that is the subject of such Cleanup Costs (a "State Environmental Lien"). All subsequent liens on such property are subordinated to such State Environmental Lien and, in some states, even prior recorded liens are subordinated to such State Environmental Liens. In the latter states, the security interest of the Trustee in a property that is subject to such a State Environmental Lien could be adversely affected. The Servicing Contract provides that title to a Mortgaged Property securing a defaulted Qualified Loan shall not be taken by the Trust Fund if the Central Servicer determines that Cleanup Costs would exceed the potential recovery upon liquidation of such Qualified Loan. ENFORCEABILITY OF CERTAIN PROVISIONS General. Upon foreclosure, courts have imposed general equitable principles. These equitable principles are generally designed to relieve the borrower from the legal effect of his defaults under the loan documents. Examples of judicial remedies that have been fashioned include judicial requirements that the lender undertake affirmative and expensive actions to determine the causes for the borrower's default and the likelihood that the borrower will be able to reinstate the loan. In some cases, courts have substituted their judgment for the lender's judgment and have required that lenders reinstate loans or recast payment schedules in order to accommodate borrowers who are suffering from temporary financial disability. In other cases, courts have limited the right of the lender to foreclose if the default under the mortgage instrument is not monetary, such as the borrower failing to adequately maintain the property or the borrower executing a second mortgage or deed of trust affecting the property. Finally, some courts have been faced with the issue of whether or not federal or state constitutional provisions reflecting due process concerns for adequate notice require that borrowers under deeds of trust or mortgages receive notices in addition to the statutorily prescribed minimum. For the most part, these cases have upheld the notice provisions as being reasonable or have found that the sale by a trustee under a deed of trust, or under a mortgage having a power of sale, does not involve sufficient state action to afford constitutional protection to the borrower. Due-on-Sale Clauses. Some or all of the Qualified Loans in a Trust Fund, as set forth in the related Prospectus Supplement, may contain due-on-sale clauses. These clauses permit the lender to accelerate the maturity of the loan if the borrower sells, transfers or conveys the property. The enforceability of these clauses has been the subject of legislation or litigation in many states, and in some cases the enforceability of these clauses was limited or denied. Federal legislation that overrides state laws restricting the enforceability of due-on-sale clauses applies only to mortgage loans secured by a residence occupied by the borrower. Similar state laws may restrict the enforceability of due-on-encumbrance provisions contained in the Qualified Loan. Any inability to enforce a due-on-sale clause may result in a Qualified Loan bearing an interest rate below the current market rate being assumed by a new purchaser of the Mortgaged Property rather than being paid off, which may have an impact upon the average life of the Qualified Loans and the number of Qualified Loans which may be outstanding until maturity. APPLICABILITY OF USURY LAWS Section 8.12(d) of the Farmer Mac Charter expressly excludes all Qualified Loans purchased by the Depositor within 180 days of such Qualified Loan's date of origination from any provision of the constitution or law of any state which expressly limits the rate or amount of interest, discount points, financial charges, or other charges, including Yield Maintenance Charges and Prepayment Premiums, that may be charged, taken, received, or reserved. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following summary of the anticipated material federal income tax consequences of the purchase, ownership and disposition of Certificates is based on the advice of Brown & Wood, counsel to the Depositor. This summary is based on laws, regulations, including the REMIC regulations promulgated by the Treasury Department (the "REMIC Regulations"), rulings and decisions now in effect or (with respect to regulations) proposed, all of which are subject to change either prospectively or retroactively. Brown & Wood will deliver an opinion to the Depositor that the information set forth under this caption, "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," to the extent that it constitutes matters of law or legal conclusions, is correct in all material respects. This summary does not address the federal income tax consequences of an investment in Certificates applicable to all categories of investors, some of which (for example, banks and insurance companies) may be subject to special rules. Prospective investors should consult their tax advisors regarding the federal, state, local and any other tax consequences to them of the purchase, ownership and disposition of Certificates. GENERAL The federal income tax consequences to Certificateholders will vary depending on whether an election is made to treat the Trust Fund relating to a particular Series of Certificates as a REMIC under the Code. The Prospectus Supplement for each Series of Certificates will specify whether a REMIC election will be made. GRANTOR TRUST FUNDS If a REMIC election is not made, Brown & Wood will deliver its opinion that the Trust Fund will not be classified as an association taxable as a corporation and that each such Trust Fund will be classified as a grantor trust under subpart E, Part I of subchapter J of the Code. In this case, owners of Certificates will be treated for federal income tax purposes as owners of a portion of the Trust Fund's assets as described below. A. SINGLE CLASS OF GRANTOR TRUST CERTIFICATES Characterization. The Trust Fund may be created with one class of Grantor Trust Certificates. In this case, each Grantor Trust Certificateholder will be treated as the owner of a pro rata undivided interest in the interest and principal portions of the Trust Fund represented by the Grantor Trust Certificates and will be considered the equitable owner of a pro rata undivided interest in each of the Qualified Assets in the Pool. Any amounts received by a Grantor Trust Certificateholder in lieu of amounts due with respect to any Qualified Asset because of a default or delinquency in payment will be treated for federal income tax purposes as having the same character as the payments they replace. Each Grantor Trust Certificateholder will be required to report on its federal income tax return in accordance with such Grantor Trust Certificateholder's method of accounting its pro rata share of the entire income from the Qualified Loans in the Trust Fund represented by Grantor Trust Certificates, including interest, original issue discount ("OID"), if any, prepayment fees, assumption fees, any gain recognized upon an assumption and late payment charges received by the Central Servicer. Under Code Sections 162 or 212 each Grantor Trust Certificateholder will be entitled to deduct its pro rata share of servicing fees, prepayment fees, assumption fees, any loss recognized upon an assumption and late payment charges retained by the Central Servicer, provided that such amounts are reasonable compensation for services rendered to the Trust Fund. Grantor Trust Certificateholders that are individuals, estates or trusts will be entitled to deduct their share of expenses as itemized deductions only to the extent such expenses plus all other Code Section 212 expenses exceed two percent of its adjusted gross income. In addition, the amount of itemized deductions otherwise allowable for the taxable year for an individual whose adjusted gross income exceeds the applicable amount (which amount will be adjusted for inflation) will be reduced by the lesser of (i) 3% of the excess of adjusted gross income over the applicable amount or (ii) 80% of the amount of itemized deductions otherwise allowable for such taxable year. A Grantor Trust Certificateholder using the cash method of accounting must take into account its pro rata share of income and deductions as and when collected by or paid to the Central Servicer. A Grantor Trust Certificateholder using an accrual method of accounting must take into account its pro rata share of income and deductions as they become due or are paid to the Central Servicer, whichever is earlier. If the servicing fees paid to the Central Servicer are deemed to exceed reasonable servicing compensation, the amount of such excess could be considered as an ownership interest retained by the Central Servicer (or any person to whom the Central Servicer assigned for value all or a portion of the servicing fees) in a portion of the interest payments on the Qualified Assets. The Qualified Assets would then be subject to the "coupon stripping" rules of the Code discussed below. As to each Series of Certificates Brown & Wood will have advised the Depositor that: (i) a Grantor Trust Certificate owned by a "domestic building and loan association" within the meaning of Code Section 7701(a)(19) representing principal and interest payments on Qualified Assets will be considered to represent "loans . . . secured by an interest in real property which is . . . residential property" within the meaning of Code Section 7701(a)(19)(C)(v), to the extent that the Qualified Assets represented by that Grantor Trust Certificate are of a type described in such Code section; (ii) a Grantor Trust Certificate owned by a financial institution described in Code Section 593(a) representing principal and interest payments on Qualified Assets will be considered to represent "qualifying real property loans" within the meaning of Code Section 593(d) and the Treasury regulations under Code Section 593, to the extent that the Qualified Assets represented by that Grantor Trust Certificate are of a type described in such Code section; (iii) a Grantor Trust Certificate owned by a real estate investment trust representing an interest in Qualified Assets will be considered to represent "real estate assets" within the meaning of Code Section 856(c)(5)(A), and interest income on the Qualified Assets will be considered "interest on obligations secured by mortgages on real property" within the meaning of Code Section 856(c)(3)(B), to the extent that the Qualified Assets represented by that Grantor Trust Certificate are of a type described in such Code section; and (iv) a Grantor Trust Certificate owned by a REMIC will represent "obligation[s] ... which [are] principally secured by an interest in real property" within the meaning of Code Section 860G(a)(3). Stripped Bonds and Coupons. Certain Trust Funds may consist of Farmer Mac Guaranteed Securities which constitute "stripped bonds" or "stripped coupons" as those terms are defined in section 1286 of the Code, and, as a result, such assets would be subject to the stripped bond provisions of the Code. Under these rules, such Government Securities are treated as having original issue discount based on the purchase price and the stated redemption price at maturity of each Security. As such, Grantor Trust Certificateholders would be required to include in income their pro rata share of the original issue discount on each Government Security recognized in any given year on an economic accrual basis even if the Grantor Trust Certificateholder is a cash method taxpayer. Accordingly, the sum of the income includible to the Grantor Trust Certificateholder in any taxable year may exceed amounts actually received during such year. Premium. The price paid for a Grantor Trust Certificate by a holder will be allocated to such holder's undivided interest in each Qualified Asset based on each Qualified Asset's relative fair market value, so that such holder's undivided interest in each Qualified Asset will have its own tax basis. A Grantor Trust Certificateholder that acquires an interest in Qualified Assets at a premium may elect to amortize such premium under a constant interest method, provided that the underlying mortgage loans with respect to such Qualified Assets were originated after September 27, 1985. Premium allocable to mortgage loans originated on or before September 27, 1985 should be allocated among the principal payments on such mortgage loans and allowed as an ordinary deduction as principal payments are made. Amortizable bond premium will be treated as an offset to interest income on such Grantor Trust Certificate. The basis for such Grantor Trust Certificate will be reduced to the extent that amortizable premium is applied to offset interest payments. It is not clear whether a reasonable prepayment assumption should be used in computing amortization of premium allowable under Code Section 171. A Certificateholder that makes this election for a Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that such Certificateholder acquires during the year of the election or thereafter. If a premium is not subject to amortization using a reasonable prepayment assumption, the holder of a Grantor Trust Certificate acquired at a premium should recognize a loss if a Qualified Loan (or an underlying mortgage loan with respect to a Qualified Asset) prepays in full, equal to the difference between the portion of the prepaid principal amount of such Qualified Loan (or underlying mortgage loan) that is allocable to the Certificate and the portion of the adjusted basis of the Certificate that is allocable to such Qualified Loan (or underlying mortgage loan). If a reasonable prepayment assumption is used to amortize such premium, it appears that such a loss would be available, if at all, only if prepayments have occurred at a rate faster than the reasonable assumed prepayment rate. It is not clear whether any other adjustments would be required to reflect differences between an assumed prepayment rate and the actual rate of prepayments. Original Issue Discount. The Internal Revenue Service (the "IRS") has stated in published rulings that, in circumstances similar to those described herein, the special rules of the Code relating to original issue discount ("OID") (currently Code Sections 1271 through 1273 and 1275) and Treasury regulations issued on January 27, 1994, under such Sections (the "OID Regulations"), will be applicable to a Grantor Trust Certificateholder's interest in those Qualified Assets meeting the conditions necessary for these sections to apply. Rules regarding periodic inclusion of OID income are applicable to mortgages of corporations originated after May 27, 1969, mortgages of noncorporate Mortgagors (other than individuals) originated after July 1, 1982, and mortgages of individuals originated after March 2, 1984. Such OID could arise by the financing of points or other charges by the originator of the mortgages in an amount greater than a statutory de minimis exception to the extent that the points are not currently deductible under applicable Code provisions or are not for services provided by the lender. OID generally must be reported as ordinary gross income as it accrues under a constant interest method. See "_Multiple Classes of Grantor Trust Certificates_Accrual of Original Issue Discount" below. Market Discount. A Grantor Trust Certificateholder that acquires an undivided interest in Qualified Assets may be subject to the market discount rules of Code Sections 1276 through 1278 to the extent an undivided interest in a Qualified Asset is considered to have been purchased at a "market discount." Generally, the amount of market discount is equal to the excess of the portion of the principal amount of such Qualified Asset allocable to such holder's undivided interest over such holder's tax basis in such interest. Market discount with respect to a Grantor Trust Certificate will be considered to be zero if the amount allocable to the Grantor Trust Certificate is less than 0.25% of the Grantor Trust Certificate's stated redemption price at maturity multiplied by the weighted average maturity remaining after the date of purchase. Treasury regulations implementing the market discount rules have not yet been issued; therefore, investors should consult their own tax advisors regarding the application of these rules and the advisability of making any of the elections allowed under Code Sections 1276 through 1278. The Code provides that any principal payment (whether a scheduled payment or a prepayment) or any gain on disposition of a market discount bond acquired by the taxpayer after October 22, 1986 shall be treated as ordinary income to the extent that it does not exceed the accrued market discount at the time of such payment. The amount of accrued market discount for purposes of determining the tax treatment of subsequent principal payments or dispositions of the market discount bond is to be reduced by the amount so treated as ordinary income. The Code also grants the Treasury Department authority to issue regulations providing for the computation of accrued market discount on debt instruments, the principal of which is payable in more than one installment. While the Treasury Department has not yet issued regulations, rules described in the relevant legislative history will apply. Under those rules, the holder of a market discount bond may elect to accrue market discount either on the basis of a constant interest rate or according to one of the following methods. If a Grantor Trust Certificate is issued with OID, the amount of market discount that accrues during any accrual period would be equal to the product of (i) the total remaining market discount and (ii) a fraction, the numerator of which is the OID accruing during the period and the denominator of which is the total remaining OID at the beginning of the accrual period. For Grantor Trust Certificates issued without OID, the amount of market discount that accrues during a period is equal to the product of (i) the total remaining market discount and (ii) a fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the accrual period. For purposes of calculating market discount under any of the above methods in the case of instruments (such as the Grantor Trust Certificates) that provide for payments that may be accelerated by reason of prepayments of other obligations securing such instruments, the same prepayment assumption applicable to calculating the accrual of OID will apply. Because the regulations described above have not been issued, it is impossible to predict what effect those regulations might have on the tax treatment of a Grantor Trust Certificate purchased at a discount or premium in the secondary market. A holder who acquired a Grantor Trust Certificate at a market discount also may be required to defer a portion of its interest deductions for the taxable year attributable to any indebtedness incurred or continued to purchase or carry such Grantor Trust Certificate purchased with market discount. For these purposes, the de minimis rule referred above applies. Any such deferred interest expense would not exceed the market discount that accrues during such taxable year and is, in general, allowed as a deduction not later than the year in which such market discount is includible in income. If such holder elects to include market discount in income currently as it accrues on all market discount instruments acquired by such holder in that taxable year or thereafter, the interest deferral rule described above will not apply. Election to Treat All Interest as OID. The OID Regulations permit a Certificateholder to elect to accrue all interest, discount (including de minimis market or original issue discount) and premium in income as interest, based on a constant yield method for Certificates acquired on or after April 4, 1994. If such an election were to be made with respect to a Grantor Trust Certificate with market discount, the Certificateholder would be deemed to have made an election to include in income currently market discount with respect to all other debt instruments having market discount that such Certificateholder acquires during the year of the election or thereafter. Similarly, a Certificateholder that makes this election for a Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that such Certificateholder owns or acquires. See "_Regular Certificates_Premium" herein. The election to accrue interest, discount and premium on a constant yield method with respect to a Certificate is irrevocable. Prepayment Premiums and Yield Maintenance Charges. The portion of any Prepayment Premium or Yield Maintenance Charge received by any Holder in excess of the Holder's basis allocable to the Qualified Loan which is being prepaid may be treated as short-term or long-term capital gain. Generally, prepayment premiums, to the extent passed through as distributions, are treated as producing capital gain rather than ordinary income for investors that hold a debt security as a capital asset. The holding period for long-term capital gain is one year for the Certificates. Holders should consult their tax advisors regarding the taxable status of such Prepayment Premiums or Yield Maintenance Charges. B. MULTIPLE CLASSES OF GRANTOR TRUST CERTIFICATES 1. Stripped Bonds and Stripped Coupons Pursuant to Code Section 1286, the separation of ownership of the right to receive some or all of the interest payments on an 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. For purposes of Code Sections 1271 through 1288, Code Section 1286 treats a stripped bond or a stripped coupon as an obligation issued on the date that such stripped interest is created. If a Trust Fund is created with two classes of Grantor Trust Certificates, one class of Grantor Trust Certificates may represent the right to principal and interest, or principal only, on all or a portion of the Qualified Assets (the "Stripped Bond Certificates"), while the second class of Grantor Trust Certificates may represent the right to some or all of the interest on such portion (the "Stripped Coupon Certificates"). Servicing fees in excess of reasonable servicing fees ("excess servicing") will be treated under the stripped bond rules. If the excess servicing fee is less than 100 basis points (i.e., 1% interest on the Qualified Asset principal balance) or the Certificates are initially sold with a de minimis discount (assuming no prepayment assumption is required), any non-de minimis discount arising from a subsequent transfer of the Certificates should be treated as market discount. The IRS appears to require that reasonable servicing fees be calculated on a Qualified Asset by Qualified Asset basis, which could result in some Qualified Assets being treated as having more than 100 basis points of interest stripped off. See "_Non-REMIC Certificates" and "Multiple Classes of Grantor Trust Certificates_Stripped Bonds and Stripped Coupons" herein. Although not entirely clear, a Stripped Bond Certificate generally should be treated as an interest in Qualified Assets issued on the day such Certificate is purchased for purposes of calculating any OID. Generally, if the discount on a Qualified Asset is larger than a de minimis amount (as calculated for purposes of the OID rules) a purchaser of such a Certificate will be required to accrue the discount under the OID rules of the Code. See "_Non-REMIC Certificates" and "_Single Class of Grantor Trust Certificates_Original Issue Discount" herein. However, a purchaser of a Stripped Bond Certificate will be required to account for any discount on the Qualified Assets as market discount rather than OID if either (i) the amount of OID with respect to the Qualified Assets is treated as zero under the OID de minimis rule when the Certificate was stripped or (ii) no more than 100 basis points (including any amount of servicing fees in excess of reasonable servicing fees) is stripped off of the Trust Fund's Qualified Assets. Pursuant to Revenue Procedure 91-49, issued on August 8, 1991, purchasers of Stripped Bond Certificates using an inconsistent method of accounting must change their method of accounting and request the consent of the IRS to the change in their accounting method on a statement attached to their first timely tax return filed after August 8, 1991. The precise tax treatment of Stripped Coupon Certificates is substantially uncertain. The Code could be read literally to require that OID computations be made for each payment from each Qualified Asset. However, based on the recent IRS guidance, it appears that all payments from a Qualified Asset underlying a Stripped Coupon Certificate should be treated as a single installment obligation subject to the OID rules of the Code, in which case, all payments from such Qualified Asset would be included in the Qualified Asset's stated redemption price at maturity for purposes of calculating income on such certificate under the OID rules of the Code. It is unclear under what circumstances, if any, the prepayment of Qualified Assets will give rise to a loss to the holder of a Stripped Bond Certificate purchased at a premium or a Stripped Coupon Certificate. If such Certificate is treated as a single instrument (rather than an interest in discrete mortgage loans) and the effect of prepayments is taken into account in computing yield with respect to such Grantor Trust Certificate, it appears that no loss will be available as a result of any particular prepayment unless prepayments occur at a rate faster than the assumed prepayment rate. However, if such Certificate is treated as an interest in discrete Qualified Assets, or if no prepayment assumption is used, then when a Qualified Asset is prepaid, the holder of such Certificate should be able to recognize a loss equal to the portion of the adjusted issue price of such Certificate that is allocable to such Qualified Asset. Holders of Stripped Bond Certificates and Stripped Coupon Certificates are urged to consult with their own tax advisors regarding the proper treatment of these Certificates for federal income tax purposes. Treatment of Certain Owners. Several Code sections provide beneficial treatment to certain taxpayers that invest in Qualified Assets of the type that make up the Trust Fund. With respect to these Code sections, no specific legal authority exists regarding whether the character of the Grantor Trust Certificates, for federal income tax purposes, will be the same as that of the underlying Qualified Assets. While Code Section 1286 treats a stripped obligation as a separate obligation for purposes of the Code provisions addressing OID, it is not clear whether such characterization would apply with regard to these other Code sections. Although the issue is not free from doubt, based on policy considerations, each class of Grantor Trust Certificates, should be considered to represent "qualifying real property loans" within the meaning of Code Section 593(d), "real estate assets" within the meaning of Code Section 856(c)(5)(A) and "loans . . . secured by, an interest in real property which is . . . residential real property" within the meaning of Code Section 7701(a)(19)(C)(v), and interest income attributable to Grantor Trust Certificates should be considered to represent "interest on obligations secured by mortgages on real property" within the meaning of Code Section 856(c)(3)(B), provided that in each case the underlying Qualified Assets and interest on such Qualified Assets qualify for such treatment. Prospective purchasers to which such characterization of an investment in Certificates is material should consult their own tax advisors regarding the characterization of the Grantor Trust Certificates and the income therefrom. Grantor Trust Certificates will be "obligation[s] ... which [are] principally secured, directly or indirectly, by an interest in real property" within the meaning of Code Section 860G(a)(3). 2. Grantor Trust Certificates Representing Interests in Loans Other Than ARM Loans The original issue discount rules of Code Sections 1271 through 1275 will be applicable to a Certificateholder's interest in those Qualified Assets as to which the conditions for the application of those sections are met. Rules regarding periodic inclusion of original issue discount in income are applicable to mortgages of corporations originated after May 27, 1969, mortgages of noncorporate Mortgagors (other than individuals) originated after July 1, 1982, and mortgages of individuals originated after March 2, 1984. Under the OID Regulations, such original issue discount could arise by the charging of points by the originator of the mortgage in an amount greater than the statutory de minimis exception, including a payment of points that is currently deductible by the borrower under applicable Code provisions, or under certain circumstances, by the presence of "teaser" rates on the Qualified Assets. OID on each Grantor Trust Certificate must be included in the owner's ordinary income for federal income tax purposes as it accrues, in accordance with a constant interest method that takes into account the compounding of interest, in advance of receipt of the cash attributable to such income. The amount of OID required to be included in an owner's income in any taxable year with respect to a Grantor Trust Certificate representing an interest in Qualified Assets other than Qualified Assets with interest rates that adjust periodically ("ARM Loans") likely will be computed as described below under "_Accrual of Original Issue Discount." The following discussion is based in part on the OID Regulations and in part on the provisions of the Tax Reform Act of 1986 (the "1986 Act"). The OID Regulations generally are effective for debt instruments issued on or after April 4, 1994, but may be relied upon as authority with respect to debt instruments, such as the Grantor Trust Certificates, issued after December 21, 1992. The holder of a Certificate should be aware, however, that the OID Regulations adequately address certain issues relevant to prepayable securities. Under the Code, the Qualified Assets underlying the Grantor Trust Certificate will be treated as having been issued on the date they were originated with an amount of OID equal to the excess of such Qualified Asset's stated redemption price at maturity over its issue price. The issue price of a Qualified Asset is generally the amount lent to the mortgagee, which may be adjusted to take into account certain loan origination fees. The stated redemption price at maturity of a Qualified Asset is the sum of all payments to be made on such Qualified Asset other than payments that are treated as qualified stated interest payments. The accrual of this OID, as described below under "_Accrual of Original Issue Discount," will utilize the original yield to maturity of the Grantor Trust Certificate calculated based on a reasonable assumed prepayment rate for the mortgage loans underlying the Grantor Trust Certificates (the "Prepayment Assumption"), and will take into account events that occur during the calculation period. The Prepayment Assumption will be determined in the manner prescribed by regulations that have not yet been issued. The legislative history of the 1986 Act (the "Legislative History") provides, however, that the regulations will require that the Prepayment Assumption be the prepayment assumption that is used in determining the offering price of such Certificate. No representation is made that any Certificate will prepay at the Prepayment Assumption or at any other rate. The prepayment assumption contained in the Code literally only applies to debt instruments collateralized by other debt instruments that are subject to prepayment rather than direct ownership interests in such debt instruments, such as the Certificates represent. However, no other legal authority provides guidance with regard to the proper method for accruing OID on obligations that are subject to prepayment, and, until further guidance is issued, the Master Servicer intends to calculate and report OID under the method described below. Accrual of Original Issue Discount. Generally, the owner of a Grantor Trust Certificate must include in gross income the sum of the "daily portions," as defined below, of the OID on such Grantor Trust Certificate for each day on which it owns such Certificate, including the date of purchase but excluding the date of disposition. In the case of an original owner, the daily portions of OID with respect to each component generally will be determined as set forth under the OID Regulations. A calculation will be made by the Master Servicer or such other entity specified in the related Prospectus Supplement of the portion of OID that accrues during each successive accrual period (or shorter period from the date of original issue) that ends on the day in the calendar year corresponding to each of the Distribution Dates on the Grantor Trust Certificates (or the day prior to each such date). This will be done, in the case of each full accrual period, by (i) adding (a) the present value at the end of the accrual period (determined by using as a discount factor the original yield to maturity of the respective component under the Prepayment Assumption) of all remaining payments to be received under the Prepayment Assumption on the respective component and (b) any payments included in the state redemption price at maturity received during such accrual period, and (ii) subtracting from that total the "adjusted issue price" of the respective component at the beginning of such accrual period. The adjusted issue price of a Grantor Trust Certificate at the beginning of the first accrual period is its issue price; the adjusted issue price of a Grantor Trust Certificate at the beginning of a subsequent accrual period is the adjusted issue price at the beginning of the immediately preceding accrual period plus the amount of OID allocable to that accrual period reduced by the amount of any payment other than a payment of qualified stated interest made at the end of or during that accrual period. The OID accruing during such accrual period will then be divided by the number of days in the period to determine the daily portion of OID for each day in the period. With respect to an initial accrual period shorter than a full accrual period, the daily portions of OID must be determined according to an appropriate allocation under any reasonable method. Original issue discount generally must be reported as ordinary gross income as it accrues under a constant interest method that takes into account the compounding of interest as it accrues rather than when received. However, the amount of original issue discount includible in the income of a holder of an obligation is reduced when the obligation is acquired after its initial issuance at a price greater than the sum of the original issue price and the previously accrued original issue discount, less prior payments of principal. Accordingly, if such Qualified Assets acquired by a Certificateholder are purchased at a price equal to the then unpaid principal amount of such Qualified Asset, no original issue discount attributable to the difference between the issue price and the original principal amount of such Qualified Asset (i.e. points) will be includible by such holder. Other original issue discount on the Qualified Assets (e.g., that arising from a "teaser" rate) would still need to be accrued. 3. Grantor Trust Certificates Representing Interests in ARM Loans The OID Regulations do not address the treatment of instruments, such as the Grantor Trust Certificates, which represent interests in ARM Loans. Additionally, the IRS has not issued guidance under the Code's coupon stripping rules with respect to such instruments. In the absence of any authority, the Master Servicer will report OID on Grantor Trust Certificates attributable to ARM Loans ("Stripped ARM Obligations") to holders in a manner it believes is consistent with the rules described above under the heading "_Grantor Trust Certificates Representing Interests in Loans Other Than ARM Loans" and with the OID Regulations. In general, application of these rules may require inclusion of income on a Stripped ARM Obligation in advance of the receipt of cash attributable to such income. Further, the addition of interest deferred by reason of negative amortization ("Deferred Interest") to the principal balance of an ARM Loan may require the inclusion of such amount in the income of the Grantor Trust Certificateholder when such amount accrues. Furthermore, the addition of Deferred Interest to the Grantor Trust Certificate's principal balance will result in additional income (including possibly OID income) to the Grantor Trust Certificateholder over the remaining life of such Grantor Trust Certificates. Because the treatment of Stripped ARM Obligations is uncertain, investors are urged to consult their tax advisors regarding how income will be includible with respect to such Certificates. C. SALE OR EXCHANGE OF A GRANTOR TRUST CERTIFICATE Sale or exchange of a Grantor Trust Certificate prior to its maturity will result in gain or loss equal to the difference, if any, between the amount received and the owner's adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally will equal the seller's purchase price for the Grantor Trust Certificate, increased by the OID included in the seller's gross income with respect to the Grantor Trust Certificate, and reduced by principal payments on the Grantor Trust Certificate previously received by the seller. Such gain or loss will be capital gain or loss to an owner for which a Grantor Trust Certificate is a "capital asset" within the meaning of Code Section 1221, and will be long-term or short-term depending on whether the Grantor Trust Certificate has been owned for the long-term capital gain holding period (currently more than one year). Grantor Trust Certificates will be "evidences of indebtedness" within the meaning of Code Section 582(c)(1), so that gain or loss recognized from the sale of a Grantor Trust Certificate by a bank or a thrift institution to which such section applies will be treated as ordinary income or loss. D. NON-U.S. PERSONS Generally, to the extent that a Grantor Trust Certificate evidences ownership in underlying Qualified Assets that were issued on or before July 18, 1984, interest or OID paid by the person required to withhold tax under Code Section 1441 or 1442 to (i) an owner that is not a U.S. Person (as defined below) or (ii) a Grantor Trust Certificateholder holding on behalf of an owner that is not a U.S. Person will be subject to federal income tax, collected by withholding, at a rate of 30% or such lower rate as may be provided for interest by an applicable tax treaty. Accrued OID recognized by the owner on the sale or exchange of such a Grantor Trust Certificate also will be subject to federal income tax at the same rate. Generally, such payments would not be subject to withholding to the extent that a Grantor Trust Certificate evidences ownership in Qualified Assets issued after July 18, 1984, by natural persons if such Grantor Trust Certificateholder complies with certain identification requirements (including delivery of a statement, signed by the Grantor Trust Certificateholder under penalties of perjury, certifying that such Grantor Trust Certificateholder is not a U.S. Person and providing the name and address of such Grantor Trust Certificateholder). Additional restrictions apply to Qualified Assets of where the Mortgagor is not a natural person in order to qualify for the exemption from withholding. As used herein, a "U.S. Person" means a citizen or resident of the United States, a corporation or a partnership organized in or under the laws of the United States or any political subdivision thereof or an estate or trust, the income of which from sources outside the United States is includible in gross income for federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States. E. INFORMATION REPORTING AND BACKUP WITHHOLDING The Master Servicer will furnish or make available, within a reasonable time after the end of each calendar year, to each person who was a Certificateholder at any time during such year, such information as may be deemed necessary or desirable to assist Certificateholders in preparing their federal income tax returns, or to enable holders to make such information available to beneficial owners or financial intermediaries that hold such Certificates as nominees on behalf of beneficial owners. If a holder, beneficial owner, financial intermediary or other recipient of a payment on behalf of a beneficial owner fails to supply a certified taxpayer identification number or if the Secretary of the Treasury determines that such person has not reported all interest and dividend income required to be shown on its federal income tax return, 31% backup withholding may be required with respect to any payments. Any amounts deducted and withheld from a distribution to a recipient would be allowed as a credit against such recipient's federal income tax liability. REMICS The Trust Fund relating to a Series of Certificates may elect to be treated as a REMIC. Qualification as a REMIC requires ongoing compliance with certain conditions. Although a REMIC is not generally subject to federal income tax (see, however "_Taxation of Owners of REMIC Residual Certificates" and "_Prohibited Transactions" below), if a Trust Fund with respect to which a REMIC election is made fails to comply with one or more of the ongoing requirements of the Code for REMIC status during any taxable year, including the implementation of restrictions on the purchase and transfer of the residual interests in a REMIC as described below under "Taxation of Owners of REMIC Residual Certificates," the Code provides that a Trust Fund will not be treated as a REMIC for such year and thereafter. In that event, such entity may be taxable as a separate corporation, and the related Certificates (the "REMIC Certificates") may not be accorded the status or given the tax treatment described below. While the Code authorizes the Treasury Department to issue regulations providing relief in the event of an inadvertent termination of the status of a Trust Fund as a REMIC, no such regulations have been issued. Any such relief, moreover, may be accompanied by sanctions, such as the imposition of a corporate tax on all or a portion of the REMIC's income for the period in which the requirements for such status are not satisfied. With respect to each Trust Fund that elects REMIC status, Brown & Wood will deliver its opinion generally to the effect that, under then existing law and assuming compliance with all provisions of the related Pooling and Servicing Agreement, such Trust Fund will qualify as a REMIC, and the related Certificates will be considered to be regular interests ("REMIC Regular Certificates") or a sale class of residual interests ("REMIC Residual Certificates") in the REMIC. The related Prospectus Supplement for each Series of Certificates will indicate whether the Trust Fund will make a REMIC election and whether a class of Certificates will be treated as a regular or residual interest in the REMIC. A "qualified mortgage" for REMIC purposes is any obligation (including certificates of participation in such an obligation) that is principally secured by an interest in real property and that is transferred to the REMIC within a prescribed time period in exchange for regular or residual interests in the REMIC. In general, with respect to each Series of Certificates for which a REMIC election is made, (i) Certificates held by a thrift institution taxed as a "mutual savings bank" or "domestic building and loan association" will represent interests in "qualifying real property loans" within the meaning of Code Section 593(d)(1); (ii) Certificates held by a thrift institution taxed as a "domestic building and loan association" will constitute assets described in Code Section 7701(a)(19)(C); (iii) Certificates held by a real estate investment trust will constitute "real estate assets" within the meaning of Code Section 856(c)(5)(A); and (iv) interest on Certificates held by a real estate investment trust will be considered "interest on obligations secured by mortgages on real property" within the meaning of Code Section 856(c)(3)(B). If less than 95% of the REMIC's assets are assets qualifying under any of the foregoing Code sections, the Certificates will be qualifying assets only to the extent that the REMIC's assets are qualifying assets. In addition, payments on Qualified Assets held pending distribution on the REMIC Certificates will be considered to be qualifying real property loans for purposes of Code Section 593(d)(1) and real estate assets for purposes of Code Section 856(c). Tiered REMIC Structures. For certain Series of Certificates, two separate elections may be made to treat designated portions of the related Trust Fund as REMICs (respectively, the "Subsidiary REMIC" and the "Master REMIC") for federal income tax purposes. Upon the issuance of any such Series of Certificates, Brown & Wood, counsel to the Depositor, will deliver its opinion generally to the effect that, assuming compliance with all provisions of the related Agreement, the Master REMIC as well as any Subsidiary REMIC will each qualify as a REMIC, and the REMIC Certificates issued by the Master REMIC and the Subsidiary REMIC, respectively, will be considered to evidence ownership of REMIC Regular Certificates or REMIC Residual Certificates in the related REMIC within the meaning of the REMIC provisions. Only REMIC Certificates issued by the Master REMIC and the residual interest in the Subsidiary REMIC will be offered hereunder. The Subsidiary REMIC and the Master REMIC will be treated as one REMIC solely for purposes of determining whether the REMIC Certificates will be (i) "qualifying real property loans" under Section 593(d) of the Code; (ii) "real estate assets" within the meaning of Section 856(c)(5)(A) of the Code; (iii) "loans secured by an interest in real property" under Section 7701(a)(19)(C) of the Code; and (iv) whether the income on such Certificates is interest described in Section 856(c)(3)(B) of the Code. A. TAXATION OF OWNERS OR REMIC REGULAR CERTIFICATES General. Except as otherwise stated in this discussion, REMIC Regular Certificates will be treated for federal income tax purposes as debt instruments issued by the REMIC and not as ownership interests in the REMIC or its assets. Moreover, holders of REMIC Regular Certificates that otherwise report income under a cash method of accounting will be required to report income with respect to REMIC Regular Certificates under an accrual method. Original Issue Discount and Premium. The REMIC Regular Certificates may be issued with OID. Generally, such OID, if any, will equal the difference between the "stated redemption price at maturity" of a REMIC Regular Certificate and its "issue price." Holders of any class of Certificates issued with OID will be required to include such OID in gross income for federal income tax purposes as it accrues, in accordance with a constant interest method based on the compounding of interest as it accrues rather than in accordance with receipt of the interest payments. The following discussion is based in part on the OID Regulations and in part on the provisions of the 1986 Act. Holders of REMIC Regular Certificates (the "REMIC Regular Certificateholders") should be aware, however, that the OID Regulations do not adequately address certain issues relevant to prepayable securities, such as the REMIC Regular Certificates. Rules governing OID are set forth in Code Sections 1271 through 1273 and 1275. These rules require that the amount and rate of accrual of OID be calculated based on the Prepayment Assumption and the anticipated reinvestment rate, if any, relating to the REMIC Regular Certificates and prescribe a method for adjusting the amount and rate of accrual of such discount where the actual prepayment rate differs from the Prepayment Assumption. Under the Code, the Prepayment Assumption must be determined in the manner prescribed by regulations, which regulations have not yet been issued. The Legislative History provides, however, that Congress intended the regulations to require that the Prepayment Assumption be the prepayment assumption that is used in determining the initial offering price of such REMIC Regular Certificates. The Prospectus Supplement for each Series of REMIC Regular Certificates will specify the Prepayment Assumption to be used for the purpose of determining the amount and rate of accrual of OID. No representation is made that the REMIC Regular Certificates will prepay at the Prepayment Assumption or at any other rate. In general, each REMIC Regular Certificate will be treated as a single installment obligation issued with an amount of OID equal to the excess of its "stated redemption price at maturity" over its "issue price." The issue price of a REMIC Regular Certificate is the first price at which a substantial amount of REMIC Regular Certificates of that class are first sold to the public (excluding bond houses, brokers, underwriters or wholesalers). If less than a substantial amount of a particular class of REMIC Regular Certificates is sold for cash on or prior to the date of their initial issuance (the "Closing Date"), the issue price for such class will be treated as the fair market value of such class on the Closing Date. The issue price of a REMIC Regular Certificate also includes the amount paid by an initial Certificateholder for accrued interest that relates to a period prior to the issue date of the REMIC Regular Certificate. The stated redemption price at maturity of a REMIC Regular Certificate includes the original principal amount of the REMIC Regular Certificate, but generally will not include distributions of interest if such distributions constitute "qualified stated interest." Qualified stated interest generally means interest payable at a single fixed rate or qualified variable rate (as described below) provided that such interest payments are unconditionally payable at intervals of one year or less during the entire term of the REMIC Regular Certificate. Interest is payable at a single fixed rate only if the rate appropriately takes into account the length of the interval between payments. Distributions of interest on REMIC Regular Certificates with respect to which Deferred Interest will accrue will not constitute qualified stated interest payments, and the stated redemption price at maturity of such REMIC Regular Certificates includes all distributions of interest as well as principal thereon. Where the interval between the issue date and the first Distribution Date on a REMIC Regular Certificate is longer than the interval between subsequent Distribution Dates, the greater of any original issue discount (disregarding the rate in the first period) and any interest foregone during the first period is treated as the amount by which the stated redemption price at maturity of the Certificate exceeds its issue price for purposes of the de minimis rule described below. The OID Regulations suggest that all interest on a long first period REMIC Regular Certificate that is issued with non-de minimis OID, as determined under the foregoing rule, will be treated as OID. Where the interval between the issue date and the first Distribution Date on a REMIC Regular Certificate is shorter than the interval between subsequent Distribution Dates, interest due on the first Distribution Date in excess of the amount that accrued during the first period would be added to the Certificates stated redemption price at maturity. REMIC Regular Certificateholders should consult their own tax advisors to determine the issue price and stated redemption price at maturity of a REMIC Regular Certificate. Under the de minimis rule, OID on a REMIC Regular Certificate will be considered to be zero if such OID is less than 0.25% of the stated redemption price at maturity of the REMIC Regular Certificate multiplied by the weighted average maturity of the REMIC Regular Certificate. For this purpose, the weighted average maturity of the REMIC Regular Certificate is computed as the sum of the amounts determined by multiplying the number of full years (i.e., rounding down partial years) from the issue date until each distribution in reduction of stated redemption price at maturity is scheduled to be made by a fraction, the numerator of which is the amount of each distribution included in the stated redemption price at maturity of the REMIC Regular Certificate and the denominator of which is the stated redemption price at maturity of the REMIC Regular Certificate. Although currently unclear, it appears that the schedule of such distributions should be determined in accordance with the Prepayment Assumption. The Prepayment Assumption with respect to a Series of REMIC Regular Certificates will be set forth in the related Prospectus Supplement. Holders generally must report de minimis OID pro rata as principal payments are received, and such income will be capital gain if the REMIC Regular Certificate is held as a capital asset. However, accrual method holders may elect to accrue all de minimis OID as well as market discount under a constant interest method. The Prospectus Supplement with respect to a Trust Fund may provide for certain REMIC Regular Certificates to be issued at prices significantly exceeding their principal amounts or based on notional principal balances (the "Super- Premium Certificates"). The income tax treatment of such REMIC Regular Certificates is not entirely certain. For information reporting purposes, the Trust Fund intends to take the position that the stated redemption price at maturity of such REMIC Regular Certificates is the sum of all payments to be made on such REMIC Regular Certificates determined under the Prepayment Assumption, with the result that such REMIC Regular Certificates would be issued with OID. The calculation of income in this manner could result in negative original issue discount (which delays future accruals of OID rather than being immediately deductible) when prepayments on the Qualified Assets exceed those estimated under the Prepayment Assumption. The IRS might contend, however, that certain contingent payment rules contained in regulations proposed on April 8, 1986, with respect to original issue discount should apply to such Certificates. Under those rules, a Super-Premium Certificate would not be required to report income on the basis of a yield based on the Prepayment Assumption, but rather would use a yield equal to the applicable Federal rate (which is an average yield on Treasury obligations), until the initial price of the respective Super-Premium Certificate is fully recovered. The IRS recently proposed and then withdrew a revised set of proposed contingent payment regulations which differed substantially from the contingent payment regulations proposed in 1986. The proposed regulations regarding contingent interest have not been adopted in final form and may not currently be relied upon. If the Super Premium Certificates were treated as contingent payment obligations, it is unclear how holders of those Certificates would report income or recover their basis. In the alternative, the IRS could assert that the stated redemption price at maturity of such REMIC Regular Certificates should be limited to their principal amount (subject to the discussion below under "_Accrued Interest Certificates"), so that such REMIC Regular Certificates would be considered for federal income tax purposes to be issued at a premium. If such a position were to prevail, the rules described below under "_Taxation of Owners of REMIC Regular Certificates_Premium" would apply. It is unclear when a loss may be claimed for any unrecovered basis for a Super-Premium Certificate. It is possible that a holder of a Super-Premium Certificate may only claim a loss when its remaining basis exceeds the maximum amount of future payments, assuming no further prepayments or when the final payment is received with respect to such Super-Premium Certificate. Under the REMIC Regulations, if the issue price of a REMIC Regular Certificate (other than any REMIC Regular Certificate based on a notional amount) does not exceed 125% of its actual principal amount, the interest rate is not considered disproportionately high. Accordingly, such REMIC Regular Certificate generally should not be treated as a Super-Premium Certificate and the rules described below under "_REMIC Regular Certificates_Premium" should apply. However, it is possible that holders of REMIC Regular Certificates issued at a premium, even if the premium is less than 25% of such Certificate's actual principal balance, will be required to amortize the premium under an original issue discount method or contingent interest method even though no election under Code Section 171 is made to amortize such premium. Generally, a REMIC Regular Certificateholder must include in gross income the "daily portions," as determined below, of the OID that accrues on a REMIC Regular Certificate for each day a Certificateholder holds the REMIC Regular Certificate, including the purchase date but excluding the disposition date. In the case of an original holder of a REMIC Regular Certificate, a calculation will be made of the portion of the OID that accrues during each successive period ("an accrual period") that ends on the day in the calendar year corresponding to a Distribution Date (or if Distribution Dates are on the first day or first business day of the immediately preceding month, interest may be treated as payable on the last day of the immediately preceding month) and begins on the day after the end of the immediately preceding accrual period (or on the issue date in the case of the first accrual period). This will be done, in the case of each full accrual period, by (i) adding (a) the present value at the end of the accrual period (determined by using as a discount factor the original yield to maturity of the REMIC Regular Certificates as calculated under the Prepayment Assumption) of all remaining payments to be received on the REMIC Regular Certificates under the Prepayment Assumption and (b) any payments included in the stated redemption price at maturity received during such accrual period, and (ii) subtracting from that total the adjusted issue price of the REMIC Regular Certificates at the beginning of such accrual period. The adjusted issue price of a REMIC Regular Certificate at the beginning of the first accrual period is its issue price; the adjusted issue price of a REMIC Regular Certificate at the beginning of a subsequent accrual period is the adjusted issue price at the beginning of the immediately preceding accrual period plus the amount of OID allocable to that accrual period and reduced by the amount of any payment other than a payment of qualified stated interest made at the end of or during that accrual period. The OID accrued during an accrual period will then be divided by the number of days in the period to determine the daily portion of OID for each day in the accrual period. The calculation of OID under the method described above will cause the accrual of OID to either increase or decrease (but never below zero) in a given accrual period to reflect the fact that prepayments are occurring faster or slower than under the Prepayment Assumption. With respect to an initial accrual period shorter than a full accrual period, the daily portions of OID may be determined according to an appropriate allocation under any reasonable method. A subsequent purchaser of a REMIC Regular Certificate issued with OID who purchases the REMIC Regular Certificate at a cost less than the remaining stated redemption price at maturity will also be required to include in gross income the sum of the daily portions of OID on that REMIC Regular Certificate. In computing the daily portions of OID for such a purchaser (as well as an initial purchaser that purchases at a price higher than the adjusted issue price but less than the stated redemption price at maturity), however, the daily portion is reduced by the amount that would be the daily portion for such day (computed in accordance with the rules set forth above) multiplied by a fraction, the numerator of which is the amount, if any, by which the price paid by such holder for that REMIC Regular Certificate exceeds the following amount: (a) the sum of the issue price plus the aggregate amount of OID that would have been includible in the gross income of an original REMIC Regular Certificateholder (who purchased the REMIC Regular Certificate at its issue price), less (b) any prior payments included in the stated redemption price at maturity, and the denominator of which is the sum of the daily portions for that REMIC Regular Certificate for all days beginning on the date after the purchase date and ending on the maturity date computed under the Prepayment Assumption. A holder who pays an acquisition premium instead may elect to accrue OID by treating the purchase as a purchase at original issue. Variable Rate REMIC Regular Certificates. REMIC Regular Certificates may provide for interest based on a variable rate. Interest based on a variable rate will constitute qualified stated interest and not contingent interest if, generally, (i) such interest is unconditionally payable at least annually, (ii) the issue price of the debt instrument does not exceed the total noncontingent principal payments and (iii) interest is based on a "qualified floating rate," an "objective rate," a combination of a single fixed rate and one or more "qualified floating rates," one "qualified inverse floating rate," or a combination of "qualified floating rates " that do not operate in a manner that significantly accelerates or defers interest payments on such REMIC Regular Certificate. The amount of OID with respect to a REMIC Regular Certificate bearing a variable rate of interest will accrue in the manner described above under "_Original Issue Discount and Premium" by assuming generally that the index used for the variable rate will remain fixed throughout the term of the Certificate. Appropriate adjustments are made for the actual variable rate. Although unclear at present, the Depositor intends to treat interest on a REMIC Regular Certificate that is a weighted average of the net interest rates on Qualified Loans as qualified stated interest. In such case, the weighted average rate used to compute the initial pass-through rate on the REMIC Regular Certificates will be deemed to be the index in effect through the life of the REMIC Regular Certificates. It is possible, however, that the IRS may treat some or all of the interest on REMIC Regular Certificates with a weighted average rate as taxable under the rules relating to obligations providing for contingent payments. Such treatment may effect the timing of income accruals on such REMIC Regular Certificates. Election to Treat All Interest as OID. The OID Regulations permit a Certificateholder to elect to accrue all interest, discount (including de minimis market or original issue discount) and premium in income as interest, based on a constant yield method. If such an election were to be made with respect to a REMIC Regular Certificate with market discount, the Certificateholder would be deemed to have made an election to include in income currently market discount with respect to all other debt instruments having market discount that such Certificateholder acquires during the year of the election or thereafter. Similarly, a Certificateholder that makes this election for a Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that such Certificateholder owns or acquires. See "_REMIC Regular Certificates_Premium" herein. The election to accrue interest, discount and premium on a constant yield method with respect to a Certificate is irrevocable. Market Discount. A purchaser of a REMIC Regular Certificate may also be subject to the market discount provisions of Code Sections 1276 through 1278. Under these provisions and the OID Regulations, "market discount" equals the excess, if any, of (i) the REMIC Regular Certificate's stated principal amount or, in the case of a REMIC Regular Certificate with OID, the adjusted issue price (determined for this purpose as if the purchaser had purchased such REMIC Regular Certificate from an original holder) over (ii) the price for such REMIC Regular Certificate paid by the purchaser. A Certificateholder that purchases a REMIC Regular Certificate at a market discount will recognize income upon receipt of each distribution representing amounts included in such certificate's stated redemption price at maturity. In particular, under Section 1276 of the Code such a holder generally will be required to allocate each such distribution first to accrued market discount not previously included in income, and to recognize ordinary income to that extent. A Certificateholder may elect to include market discount in income currently as it accrues rather than including it on a deferred basis in accordance with the foregoing. If made, such election will apply to all market discount bonds acquired by such Certificateholder on or after the first day of the first taxable year to which such election applies. Market discount with respect to a REMIC Regular Certificate will be considered to be zero if the amount allocable to the REMIC Regular Certificate is less than 0.25% of such REMIC Regular Certificate's stated redemption price at maturity multiplied by such REMIC Regular Certificate's weighted average maturity remaining after the date of purchase. If market discount on a REMIC Regular Certificate is considered to be zero under this rule, the actual amount of market discount must be allocated to the remaining principal payments on the REMIC Regular Certificate, and gain equal to such allocated amount will be recognized when the corresponding principal payment is made. Treasury regulations implementing the market discount rules have not yet been issued; therefore, investors should consult their own tax advisors regarding the application of these rules and the advisability of making any of the elections allowed under Code Sections 1276 through 1278. The Code provides that any principal payment (whether a scheduled payment or a prepayment) or any gain on disposition of a market discount bond acquired by the taxpayer after October 22, 1986, shall be treated as ordinary income to the extent that it does not exceed the accrued market discount at the time of such payment. The amount of accrued market discount for purposes of determining the tax treatment of subsequent principal payments or dispositions of the market discount bond is to be reduced by the amount so treated as ordinary income. The Code also grants authority to the Treasury Department to issue regulations providing for the computation of accrued market discount on debt instruments, the principal of which is payable in more than one installment. Until such time as regulations are issued by the Treasury, rules described in the Legislative History will apply. Under those rules, the holder of a market discount bond may elect to accrue market discount either on the basis of a constant interest method rate or according to one of the following methods. For REMIC Regular Certificates issued with OID, the amount of market discount that accrues during a period is equal to the product of (i) the total remaining market discount and (ii) a fraction, the numerator of which is the OID accruing during the period and the denominator of which is the total remaining OID at the beginning of the period. For REMIC Regular Certificates issued without OID, the amount of market discount that accrues during a period is equal to the product of (a) the total remaining market discount and (b) a fraction, the numerator of which is the amount of stated interest paid during the accrual period and the denominator of which is the total amount of stated interest remaining to be paid at the beginning of the period. For purposes of calculating market discount under any of the above methods in the case of instruments (such as the REMIC Regular Certificates) that provide for payments that may be accelerated by reason of prepayments of other obligations securing such instruments, the same Prepayment Assumption applicable to calculating the accrual of OID will apply. A holder who acquired a REMIC Regular Certificate at a market discount also may be required to defer a portion of its interest deductions for the taxable year attributable to any indebtedness incurred or continued to purchase or carry such Certificate purchased with market discount. For these purposes, the de minimis rule referred to above applies. Any such deferred interest expense would not exceed the market discount that accrues during such taxable year and is, in general, allowed as a deduction not later than the year in which such market discount is includible in income. If such holder elects to include market discount in income currently as it accrues on all market discount instruments acquired by such holder in that taxable year or thereafter, the interest deferral rule described above will not apply. Premium. A purchaser of a REMIC Regular Certificate that purchases the REMIC Regular Certificate at a cost (not including accrued qualified stated interest) greater than its remaining stated redemption price at maturity will be considered to have purchased the REMIC Regular Certificate at a premium and may elect to amortize such premium under a constant yield method. A Certificateholder that makes this election for a Certificate that is acquired at a premium will be deemed to have made an election to amortize bond premium with respect to all debt instruments having amortizable bond premium that such Certificateholder acquires during the year of the election or thereafter. It is not clear whether the Prepayment Assumption would be taken into account in determining the life of the REMIC Regular Certificate for this purpose. However, the Legislative History states that the same rules that apply to accrual of market discount (which rules require use of a Prepayment Assumption in accruing market discount with respect to REMIC Regular Certificates without regard to whether such Certificates have OID) will also apply in amortizing bond premium under Code Section 171. The Code provides that amortizable bond premium will be allocated among the interest payments on such REMIC Regular Certificates and will be applied as an offset against such interest payment. Deferred Interest. Certain classes of REMIC Regular Certificates may provide for the accrual of Deferred Interest with respect to one or more ARM Loans. Any Deferred Interest that accrues with respect to a class of REMIC Regular Certificates will constitute income to the holders of such Certificates prior to the time distributions of cash with respect to such Deferred Interest are made. It is unclear, under the OID Regulations, whether any of the interest on such Certificates will constitute qualified stated interest or whether all or a portion of the interest payable on such Certificates must be included in the stated redemption price at maturity of the Certificates and accounted for as OID (which could accelerate such inclusion). Interest on REMIC Regular Certificates must in any event be accounted for under an accrual method by the holders of such Certificates and, therefore, applying the latter analysis may result only in a slight difference in the timing of the inclusion in income of interest on such REMIC Regular Certificates. Sale, Exchange or Redemption. If a REMIC Regular Certificate is sold, exchanged, redeemed or retired, the seller will recognize gain or loss equal to the difference between the amount realized on the sale, exchange, redemption, or retirement and the seller's adjusted basis in the REMIC Regular Certificate. Such adjusted basis generally will equal the cost of the REMIC Regular Certificate to the seller, increased by any OID and market discount included in the seller's gross income with respect to the REMIC Regular Certificate, and reduced (but not below zero) by payments included in the stated redemption price at maturity previously received by the seller and by any amortized premium. Similarly, a holder who receives a payment that is part of the stated redemption price at maturity of a REMIC Regular Certificate will recognize gain equal to the excess, if any, of the amount of the payment over the holder's adjusted basis in the REMIC Regular Certificate. A REMIC Regular Certificateholder who receives a final payment that is less than the holder's adjusted basis in the REMIC Regular Certificate will generally recognize a loss. Except as provided in the following paragraph and as provided under "_Market Discount" above, any such gain or loss will be capital gain or loss, provided that the REMIC Regular Certificate is held as a "capital asset" (generally, property held for investment) within the meaning of Code Section 1221. Gain from the sale or other disposition of a REMIC Regular Certificate that might otherwise be capital gain will be treated as ordinary income to the extent that such gain does not exceed the excess, if any, of (i) the amount that would have been includible in such holder's income with respect to the REMIC Regular Certificate had income accrued thereon at a rate equal to 110% of the AFR as defined in Code Section 1274(d) determined as of the date of purchase of such REMIC Regular Certificate, over (ii) the amount actually includible in such holder's income. The Certificates will be "evidences of indebtedness" within the meaning of Code Section 582(c)(1), so that gain or loss recognized from the sale of a REMIC Regular Certificate by a bank or a thrift institution to which such section applies will be ordinary income or loss. The REMIC Regular Certificate information reports will include a statement of the adjusted issue price of the REMIC Regular Certificate at the beginning of each accrual period. In addition, the reports will include information necessary to compute the accrual of any market discount that may arise upon secondary trading of REMIC Regular Certificates. Because exact computation of the accrual of market discount on a constant yield method would require information relating to the holder's purchase price which the REMIC may not have, it appears that the information reports will only require information pertaining to the appropriate proportionate method of accruing market discount. Accrued Interest Certificates. Certain of the REMIC Regular Certificates ("Payment Lag Certificates") may provide for payments of interest based on a period that corresponds to the interval between Distribution Dates but that ends prior to each such Distribution Date. The period between the Closing Date for Payment Lag Certificates and their first Distribution Date may or may not exceed such interval. Purchasers of Payment Lag Certificates for which the period between the Closing Date and the first Distribution Date does not exceed such interval could pay upon purchase of the REMIC Regular Certificates accrued interest in excess of the accrued interest that would be paid if the interest paid on the Distribution Date were interest accrued from Distribution Date to Distribution Date. If a portion of the initial purchase price of a REMIC Regular Certificate is allocable to interest that has accrued prior to the issue date ("pre-issuance accrued interest") and the REMIC Regular Certificate provides for a payment of stated interest on the first payment date (and the first payment date is within one year of the issue date) that equals or exceeds the amount of the pre- issuance accrued interest, then the REMIC Regular Certificates' issue price may be computed by subtracting from the issue price the amount of pre-issuance accrued interest, rather than as an amount payable on the REMIC Regular Certificate. However, it is unclear under this method how the OID Regulations treat interest on Payment Lag Certificates. Therefore, in the case of a Payment Lag Certificate, the Trust Fund intends to include accrued interest in the issue price and report interest payments made on the first Distribution Date as interest to the extent such payments represent interest for the number of days that the Certificateholder has held such Payment Lag Certificate during the first accrual period. Investors should consult their own tax advisors concerning the treatment for federal income tax purposes of Payment Lag Certificates. Non-Interest Expenses of the REMIC. Under temporary Treasury regulations, if the REMIC is considered to be a "single- class REMIC," a portion of the REMIC's servicing, administrative and other non-interest expenses will be allocated as a separate item to those REMIC Regular Certificateholders that are "pass- through interest holders." Certificateholders that are pass- through interest holders should consult their own tax advisors about the impact of these rules on an investment in the REMIC Regular Certificates. See "Pass-Through of Non-Interest Expenses of the REMIC" under "Taxation of Owners of REMIC Residual Certificates" below. Prepayment Premiums and Yield Maintenance Charges. The portion of any Prepayment Premium or Yield Maintenance Charge received by any Holder in excess of the Holder's basis allocable to the Qualified Loan which is being prepaid may be treated as short-term or long-term capital gain. Generally, prepayment premiums, to the extent passed through as distributions, are treated as producing capital gain rather than ordinary income for investors that hold a debt security as a capital asset. It is unclear under the REMIC Regulations whether such portion will be treated as capital gain or additional interest. The holding period for long-term capital gain is one year for the Certificates. Holders should consult their tax advisors regarding the taxable status of such Prepayment Premiums or Yield Maintenance Charges. Non-U.S. Persons. Generally, payments of interest (including any payment with respect to accrued OID) on the REMIC Regular Certificates to a REMIC Regular Certificateholder who is not a U.S. Person and is not engaged in a trade or business within the United States will not be subject to federal withholding tax if (i) such REMIC Regular Certificateholder does not actually or constructively own 10 percent or more of the combined voting power of all classes of equity in the Issuer; (ii) such REMIC Regular Certificateholder is not a controlled foreign corporation (within the meaning of Code Section 957) related to the Issuer; and (iii) such REMIC Regular Certificateholder complies with certain identification requirements (including delivery of a statement, signed by the REMIC Regular Certificateholder under penalties of perjury, certifying that such REMIC Regular Certificateholder is a foreign person and providing the name and address of such REMIC Regular Certificateholder). If a REMIC Regular Certificateholder is not exempt from withholding, distributions of interest to such holder, including distributions in respect of accrued OID, may be subject to a 30% withholding tax, subject to reduction under any applicable tax treaty. Further, a REMIC Regular Certificate will not be included in the estate of a non-resident alien individual and will not be subject to United States estate taxes. However, Certificateholders who are non-resident alien individuals should consult their tax advisors concerning this question. REMIC Regular Certificateholders who are not U.S. Persons and persons related to such holders should not acquire any REMIC Residual Certificates, and holders of REMIC Residual Certificates (the "REMIC Residual Certificateholder") and persons related to REMIC Residual Certificateholders should not acquire any REMIC Regular Certificates without consulting their tax advisors as to the possible adverse tax consequences of doing so. Information Reporting and Backup Withholding. The Master Servicer will furnish or make available, within a reasonable time after the end of each calendar year, to each person who was a REMIC Regular Certificateholder at any time during such year, such information as may be deemed necessary or desirable to assist REMIC Regular Certificateholders in preparing their federal income tax returns, or to enable holders to make such information available to beneficial owners or financial intermediaries that hold such REMIC Regular Certificates on behalf of beneficial owners. If a holder, beneficial owner, financial intermediary or other recipient of a payment on behalf of a beneficial owner fails to supply a certified taxpayer identification number or if the Secretary of the Treasury determines that such person has not reported all interest and dividend income required to be shown on its federal income tax return, 31% backup withholding may be required with respect to any payments. Any amounts deducted and withheld from a distribution to a recipient would be allowed as a credit against such recipient's federal income tax liability. b. TAXATION OF OWNERS OF REMIC RESIDUAL CERTIFICATES Allocation of the Income of the REMIC to the REMIC Residual Certificates. The REMIC will not be subject to federal income tax except with respect to income from prohibited transactions and certain other transactions. See "_Prohibited Transactions and Other Taxes" below. Instead, each original holder of a REMIC Residual Certificate will report on its federal income tax return, as ordinary income, its share of the taxable income of the REMIC for each day during the taxable year on which such holder owns any REMIC Residual Certificates. The taxable income of the REMIC for each day will be determined by allocating the taxable income of the REMIC for each calendar quarter ratably to each day in the quarter. Such a holder's share of the taxable income of the REMIC for each day will be based on the portion of the outstanding REMIC Residual Certificates that such holder owns on that day. The taxable income of the REMIC will be determined under an accrual method and will be taxable to the holders of REMIC Residual Certificates without regard to the timing or amounts of cash distributions by the REMIC. Ordinary income derived from REMIC Residual Certificates will be "portfolio income" for purposes of the taxation of taxpayers subject to the limitations on the deductibility of "passive losses." As residual interests, the REMIC Residual Certificates will be subject to tax rules, described below, that differ from those that would apply if the REMIC Residual Certificates were treated for federal income tax purposes as direct ownership interests in the Certificates or as debt instruments issued by the REMIC. A REMIC Residual Certificateholder may be required to include taxable income from the REMIC Residual Certificate in excess of the cash distributed. For example, a structure where principal distributions are made serially on regular interests (that is, a fast-pay, slow-pay structure) may generate such a mismatching of income and cash distributions (that is, "phantom income"). This mismatching may be caused by the use of certain required tax accounting methods by the REMIC, variations in the prepayment rate of the underlying Qualified Assets and certain other factors. Depending upon the structure of a particular transaction, the aforementioned factors may significantly reduce the after-tax yield of a REMIC Residual Certificate to a REMIC Residual Certificateholder. Investors should consult their own tax advisors concerning the federal income tax treatment of a REMIC Residual Certificate and the impact of such tax treatment on the after-tax yield of a REMIC Residual Certificate. A subsequent REMIC Residual Certificateholder also will report on its federal income tax return amounts representing a daily share of the taxable income of the REMIC for each day that such REMIC Residual Certificateholder owns such REMIC Residual Certificate. Those daily amounts generally would equal the amounts that would have been reported for the same days by an original REMIC Residual Certificateholder, as described above. The Legislative History indicates that certain adjustments may be appropriate to reduce (or increase) the income of a subsequent holder of a REMIC Residual Certificate that purchased such REMIC Residual Certificate at a price greater than (or less than) the adjusted basis such REMIC Residual Certificate would have in the hands of an original REMIC Residual Certificateholder. See "_Sale or Exchange of REMIC Residual Certificates" below. It is not clear, however, whether such adjustments will in fact be permitted or required and, if so, how they would be made. The REMIC Regulations do not provide for any such adjustments. Taxable Income of the REMIC Attributable to Residual Interests. The taxable income of the REMIC will reflect a netting of (i) the income from the Qualified Assets and the REMIC's other assets and (ii) the deductions allowed to the REMIC for interest and OID on the REMIC Regular Certificates and, except as described above under "_Taxation of Owners of REMIC Regular Certificates_Non-Interest Expenses of the REMIC," other expenses. REMIC taxable income is generally determined in the same manner as the taxable income of an individual using the accrual method of accounting, except that (i) the limitations on deductibility of investment interest expense and expenses for the production of income do not apply, (ii) all bad loans will be deductible as business bad debts, and (iii) the limitation on the deductibility of interest and expenses related to tax-exempt income will apply. The REMIC's gross income includes interest, original issue discount income, and market discount income, if any, on the Qualified Loans, reduced by amortization of any premium on the Qualified Loans, plus income on reinvestment of cash flows and reserve assets, plus any cancellation of indebtedness income upon allocation of realized losses to the REMIC Regular Certificates. Note that the timing of cancellation of indebtedness income recognized by REMIC Residual Certificateholders resulting from defaults and delinquencies on Qualified Assets may differ from the time of the actual loss on the Qualified Asset. The REMIC's deductions include interest and original issue discount expense on the REMIC Regular Certificates, servicing fees on the Qualified Loans, other administrative expenses of the REMIC and realized losses on the Qualified Loans. The requirement that REMIC Residual Certificateholders report their pro rata share of taxable income or net loss of the REMIC will continue until there are no Certificates of any class of the related Series outstanding. For purposes of determining its taxable income, the REMIC will have an initial aggregate tax basis in its assets equal to the sum of the issue prices of the REMIC Regular Certificates and the REMIC Residual Certificates (or, if a class of Certificates is not sold initially, its fair market value). Such aggregate basis will be allocated among the Qualified Assets and other assets of the REMIC in proportion to their respective fair market value. A Qualified Asset will be deemed to have been acquired with discount or premium to the extent that the REMIC's basis therein is less than or greater than its principal balance, respectively. Any such discount (whether market discount or OID) will be includible in the income of the REMIC as it accrues, in advance of receipt of the cash attributable to such income, under a method similar to the method described above for accruing OID on the REMIC Regular Certificates. The REMIC expects to elect under Code Section 171 to amortize any premium on the Qualified Assets. Premium on any Qualified Asset to which such election applies would be amortized under a constant yield method. It is not clear whether the yield of a Qualified Asset would be calculated for this purpose based on scheduled payments or taking account of the Prepayment Assumption. Additionally, such an election would not apply to the yield with respect to any underlying mortgage loan originated on or before September 27, 1985. Instead, premium with respect to such a mortgage loan would be allocated among the principal payments thereon and would be deductible by the REMIC as those payments become due. The REMIC will be allowed a deduction for interest and OID on the REMIC Regular Certificates. The amount and method of accrual of OID will be calculated for this purpose in the same manner as described above with respect to REMIC Regular Certificates except that the 0.25% per annum de minimis rule and adjustments for subsequent holders described therein will not apply. A REMIC Residual Certificateholder will not be permitted to amortize the cost of the REMIC Residual Certificate as an offset to its share of the REMIC's taxable income. However, REMIC taxable income will not include cash received by the REMIC that represents a recovery of the REMIC's basis in its assets, and, as described above, the issue price of the REMIC Residual Certificates will be added to the issue price of the REMIC Regular Certificates in determining the REMIC's initial basis in its assets. See "_Sale or Exchange of REMIC Residual Certificates" below. For a discussion of possible adjustments to income of a subsequent holder of a REMIC Residual Certificate to reflect any difference between the actual cost of such REMIC Residual Certificate to such holder and the adjusted basis such REMIC Residual Certificate would have in the hands of an original REMIC Residual Certificateholder, see "_Allocation of the Income of the REMIC to the REMIC Residual Certificates" above. Net Losses of the REMIC. The REMIC will have a net loss for any calendar quarter in which its deductions exceed its gross income. Such net loss would be allocated among the REMIC Residual Certificateholders in the same manner as the REMIC's taxable income. The net loss allocable to any REMIC Residual Certificate will not be deductible by the holder to the extent that such net loss exceeds such holder's adjusted basis in such REMIC Residual Certificate. Any net loss that is not currently deductible by reason of this limitation may only be used by such REMIC Residual Certificateholder to offset its share of the REMIC's taxable income in future periods (but not otherwise). The ability of REMIC Residual Certificateholders that are individuals or closely held corporations to deduct net losses may be subject to additional limitations under the Code. Mark to Market Rules. Prospective purchasers of a REMIC Residual Certificate should be aware that the IRS recently released proposed regulations (the "Proposed Mark-to-Market Regulations") which provide that a REMIC Residual Certificate acquired after January 3, 1995 cannot be marked-to-market. The Proposed Mark-to-Market Regulations change the temporary regulations which allowed a Residual Certificate to be marked-to- market provided that it was not a "negative value" residual interest and did not have the same economic effect as a "negative value" residual interest. Pass-Through of Non-Interest Expenses of the REMIC. As a general rule, all of the fees and expenses of a REMIC will be taken into account by holders of the REMIC Residual Certificates. In the case of a single class REMIC, however, the expenses and a matching amount of additional income will be allocated, under temporary Treasury regulations, among the REMIC Regular Certificateholders and the REMIC Residual Certificateholders on a daily basis in proportion to the relative amounts of income accruing to each Certificateholder on that day. In general terms, a single class REMIC is one that either (i) would qualify, under existing Treasury regulations, as a grantor trust if it were not a REMIC (treating all interests as ownership interests, even if they would be classified as debt for federal income tax purposes) or (ii) is similar to such a trust and is structured with the principal purpose of avoiding the single class REMIC rules. The expenses of the REMIC will be allocated to holders of the related REMIC Residual Certificates in their entirety and not to holders of the related REMIC Regular Certificates. In the case of individuals (or trusts, estates or other persons that compute their income in the same manner as individuals) who own an interest in a REMIC Regular Certificate or a REMIC Residual Certificate directly or through a pass- through interest holder that is required to pass miscellaneous itemized deductions through to its owners or beneficiaries (e.g. a partnership, an S corporation or a grantor trust), such expenses will be deductible under Code Section 67 only to the extent that such expenses, plus other "miscellaneous itemized deductions" of the individual, exceed 2% of such individual's adjusted gross income. In addition, Code Section 68 provides that the amount of itemized deductions otherwise allowable for an individual whose adjusted gross income exceeds a certain amount (the "Applicable Amount") will be reduced by the lesser of (i) 3% of the excess of the individual's adjusted gross income over the Applicable Amount or (ii) 80% of the amount of itemized deductions otherwise allowable for the taxable year. The amount of additional taxable income recognized by REMIC Residual Certificateholders who are subject to the limitations of either Code Section 67 or Code Section 68 may be substantial. Further, holders (other than corporations) subject to the alternative minimum tax may not deduct miscellaneous itemized deductions in determining such holders' alternative minimum taxable income. The REMIC is required to report to each pass-through interest holder and to the IRS such holder's allocable share, if any, of the REMIC's non-interest expenses. The term "pass-through interest holder" generally refers to individuals, entities taxed as individuals and certain pass-through entities, but does not include real estate investment trusts. REMIC Residual Certificateholders that are pass-through interest holders should consult their own tax advisors about the impact of these rules on an investment in the REMIC Residual Certificates. Excess Inclusions. A portion of the income on a REMIC Residual Certificate (referred to in the Code as an "excess inclusion") for any calendar quarter will, with an exception discussed below for certain thrift institutions, be subject to federal income tax in all events. Thus, for example, an excess inclusion (i) may not, except as described below, be offset by any unrelated losses, deductions or loss carryovers of a REMIC Residual Certificateholder; (ii) will be treated as "unrelated business taxable income" within the meaning of Code Section 512 if the REMIC Residual Certificateholder is a pension fund or any other organization that is subject to tax only on its unrelated business taxable income (see "_Tax-Exempt Investors" below); and (iii) is not eligible for any reduction in the rate of withholding tax in the case of a REMIC Residual Certificateholder that is a foreign investor. See "_Non-U.S. Persons" below. The exception for thrift institutions is available only to the institution holding the REMIC Residual Certificate and not to any affiliate of the institution, unless the affiliate is a subsidiary all the stock of which, and substantially all the indebtedness of which, is held by the institution, and which is organized and operated exclusively in connection with the organization and operation of one or more REMICs. Except as discussed in the following paragraph, with respect to any REMIC Residual Certificateholder, the excess inclusions for any calendar quarter is the excess, if any, of (i) the income of such REMIC Residual Certificateholder for that calendar quarter from its REMIC Residual Certificate over (ii) the sum of the "daily accruals" (as defined below) for all days during the calendar quarter on which the REMIC Residual Certificateholder holds such REMIC Residual Certificate. For this purpose, the daily accruals with respect to a REMIC Residual Certificate are determined by allocating to each day in the calendar quarter its ratable portion of the product of the "adjusted issue price" (as defined below) of the REMIC Residual Certificate at the beginning of the calendar quarter and 120 percent of the "Federal long-term rate" in effect at the time the REMIC Residual Certificate is issued. For this purpose, the "adjusted issue price" of a REMIC Residual Certificate at the beginning of any calendar quarter equals the issue price of the REMIC Residual Certificate, increased by the amount of daily accruals for all prior quarters, and decreased (but not below zero) by the aggregate amount of payments made on the REMIC Residual Certificate before the beginning of such quarter. The "federal long-term rate" is an average of current yields on Treasury securities with a remaining term of greater than nine years, computed and published monthly by the IRS. As an exception to the general rule described above, the Treasury Department has authority to issue regulations that would treat the entire amount of income accruing on a REMIC Residual Certificate as excess inclusions if the REMIC Residual Certificates in the aggregate are considered not to have "significant value." Under the REMIC Regulations, REMIC Residual Certificateholders that are thrift institutions described in Code Section 593 can offset excess inclusions with unrelated deductions, losses and loss carryovers provided the REMIC Residual Certificates have "significant value". For purposes of applying this rule, thrift institutions that are members of an affiliated group filing a consolidated return, together with their subsidiaries formed to issue REMICs, are treated as separate corporations. REMIC Residual Certificates have "significant value" if: (i) the REMIC Residual Certificates have an aggregate issue price that is at least equal to 2% of the aggregate issue price of all REMIC Residual Certificates and REMIC Regular Certificates with respect to the REMIC and (ii) the anticipated weighted average life of the REMIC Residual Certificates is at least 20% of the anticipated weighted average life of the REMIC based on the anticipated principal payments to be received with respect thereto (using the Prepayment Assumption and any required or permitted clean up calls or required liquidation provided for in the REMIC's organizational documents), except that all anticipated distributions are to be used to calculate the weighted average life of REMIC Regular Certificates that are not entitled to any principal payments or are entitled to a disproportionately small principal amount relative to interest payments thereon and all anticipated distributions are to be used to calculate the weighted average life of the REMIC Residual Certificates. The principal amount will be considered disproportionately small if the issue price of the REMIC Residual Certificates exceeds 125% of their initial principal amount. Finally, an ordering rule under the REMIC Regulations provides that a thrift institution may only offset its excess inclusion income with deductions after it has first applied its deductions against income that is not excess inclusion income. In the case of any REMIC Residual Certificates held by a real estate investment trust, the aggregate excess inclusions with respect to such REMIC Residual Certificates, reduced (but not below zero) by the real estate investment trust taxable income (within the meaning of Code Section 857(b)(2), excluding any net capital gain), will be allocated among the shareholders of such trust in proportion to the dividends received by such shareholders from such trust, and any amount so allocated will be treated as an excess inclusion with respect to a REMIC Residual Certificate as if held directly by such shareholder. Regulated investment companies, common trust funds and certain cooperatives are subject to similar rules. Payments. Any distribution made on a REMIC Residual Certificate to a REMIC Residual Certificateholder will be treated as a non-taxable return of capital to the extent it does not exceed the REMIC Residual Certificateholder's adjusted basis in such REMIC Residual Certificate. To the extent a distribution exceeds such adjusted basis, it will be treated as gain from the sale of the REMIC Residual Certificate. Sale or Exchange of REMIC Residual Certificates. If a REMIC Residual Certificate is sold or exchanged, the seller will generally recognize gain or loss equal to the difference between the amount realized on the sale or exchange and its adjusted basis in the REMIC Residual Certificate (except that the recognition of loss may be limited under the "wash sale" rules described below). A holder's adjusted basis in a REMIC Residual Certificate generally equals the cost of such REMIC Residual Certificate to such REMIC Residual Certificateholder, increased by the taxable income of the REMIC that was included in the income of such REMIC Residual Certificateholder with respect to such REMIC Residual Certificate, and decreased (but not below zero) by the net losses that have been allowed as deductions to such REMIC Residual Certificateholder with respect to such REMIC Residual Certificate and by the distributions received thereon by such REMIC Residual Certificateholder. In general, any such gain or loss will be capital gain or loss provided the REMIC Residual Certificate is held as a capital asset. However, REMIC Residual Certificates will be "evidences of indebtedness" within the meaning of Code Section 582(c)(1), so that gain or loss recognized from sale of a REMIC Residual Certificate by a bank or thrift institution to which such section applies would be ordinary income or loss. Except as provided in Treasury regulations yet to be issued, if the seller of a REMIC Residual Certificate reacquires such REMIC Residual Certificate, or acquires any other REMIC Residual Certificate, any residual interest in another REMIC or similar interest in a "taxable mortgage pool" (as defined in Code Section 7701(i)) during the period beginning six months before, and ending six months after, the date of such sale, such sale will be subject to the "wash sale" rules of Code Section 1091. In that event, any loss realized by the REMIC Residual Certificateholder on the sale will not be deductible, but, instead, will increase such REMIC Residual Certificateholder's adjusted basis in the newly acquired asset. PROHIBITED TRANSACTIONS AND OTHER TAXES The Code imposes a tax on REMICs equal to 100% of the net income derived from "prohibited transactions" (the "Prohibited Transactions Tax"). In general, subject to certain specified exceptions, a prohibited transaction means the disposition of a Qualified Asset, the receipt of income from a source other than a Qualified Asset or certain other permitted investments, the receipt of compensation for services, or gain from the disposition of an asset purchased with the payments on the Qualified Assets for temporary investment pending distribution on the Certificates. It is not anticipated that the Trust Fund for any Series of Certificates will engage in any prohibited transactions in which it would recognize a material amount of net income. In addition, certain contributions to a Trust Fund as to which an election has been made to treat such Trust Fund as a REMIC made after the day on which such Trust Fund issues all of its interests could result in the imposition of a tax on the Trust Fund equal to 100% of the value of the contributed property (the "Contributions Tax"). No Trust Fund for any Series of Certificates will accept contributions that would subject it to such tax. In addition, a Trust Fund as to which an election has been made to treat such Trust Fund as a REMIC may also be subject to federal income tax at the highest corporate rate on "net income from foreclosure property," determined by reference to the rules applicable to real estate investment trusts. "Net income from foreclosure property" generally means income from foreclosure property other than qualifying income for a real estate investment trust. Where any Prohibited Transactions Tax, Contributions Tax, tax on net income from foreclosure property or state or local income or franchise tax that may be imposed on a REMIC relating to any Series of Certificates arises out of or results from (i) a breach of the related Master Servicer's, Central Servicer's, Trustee's or Seller's obligations, as the case may be, under the related Agreement for such Series, such tax will be borne by such Master Servicer, Central Servicer, Trustee or Seller, as the case may be, out of its own funds or (ii) the Seller's obligation to repurchase a Qualified Loan, such tax will be borne by the Seller. In the event that such Master Servicer, Central Servicer, Trustee or Seller, as the case may be, fails to pay or is not required to pay any such tax as provided above, such tax will be payable out of the Trust Fund for such Series and will be covered under the Farmer Mac Guarantee. LIQUIDATION AND TERMINATION If the REMIC adopts a plan of complete liquidation, within the meaning of Code Section 860F(a)(4)(A)(i), which may be accomplished by designating in the REMIC's final tax return a date on which such adoption is deemed to occur, and sells all of its assets (other than cash) within a 90-day period beginning on such date, the REMIC will not be subject to any Prohibited Transaction Tax, provided that the REMIC credits or distributes in liquidation all of the sale proceeds plus its cash (other than the amounts retained to meet claims) to holders of Regular and REMIC Residual Certificates within the 90-day period. The REMIC will terminate shortly following the retirement of the REMIC Regular Certificates. If a REMIC Residual Certificateholder's adjusted basis in the REMIC Residual Certificate exceeds the amount of cash distributed to such REMIC Residual Certificateholder in final liquidation of its interest, then it would appear that the REMIC Residual Certificateholder would be entitled to a loss equal to the amount of such excess. It is unclear whether such a loss, if allowed, will be a capital loss or an ordinary loss. ADMINISTRATIVE MATTERS Solely for the purpose of the administrative provisions of the Code, the REMIC generally will be treated as a partnership and the REMIC Residual Certificateholders will be treated as the partners. Certain information will be furnished quarterly to each REMIC Residual Certificateholder who held a REMIC Residual Certificate on any day in the previous calendar quarter. Each REMIC Residual Certificateholder is required to treat items on its return consistently with their treatment on the REMIC's return, unless the REMIC Residual Certificateholder either files a statement identifying the inconsistency or establishes that the inconsistency resulted from incorrect information received from the REMIC. The IRS may assert a deficiency resulting from a failure to comply with the consistency requirement without instituting an administrative proceeding at the REMIC level. The REMIC does not intend to register as a tax shelter pursuant to Code Section 6111 because it is not anticipated that the REMIC will have a net loss for any of the first five taxable years of its existence. Any person that holds a REMIC Residual Certificate as a nominee for another person may be required to furnish the REMIC, in a manner to be provided in Treasury regulations, with the name and address of such person and other information. TAX-EXEMPT INVESTORS Any REMIC Residual Certificateholder that is a pension fund or other entity that is subject to federal income taxation only on its "unrelated business taxable income" within the meaning of Code Section 512 will be subject to such tax on that portion of the distributions received on a REMIC Residual Certificate that is considered an excess inclusion. See "_Taxation of Owners of REMIC Residual Certificates_Excess Inclusions" above. RESIDUAL CERTIFICATE PAYMENTS-NON-U.S. PERSONS Amounts paid to REMIC Residual Certificateholders who are not U.S. Persons (see "_Taxation of Owners of REMIC Regular Certificates_Non-U.S. Persons" above) are treated as interest for purposes of the 30% (or lower treaty rate) United States withholding tax. Amounts distributed to holders of REMIC Residual Certificates should qualify as "portfolio interest," subject to the conditions described in "_Taxation of Owners of REMIC Regular Certificates" above, but only to the extent that the underlying mortgage loans were originated after July 18, 1984. Furthermore, the rate of withholding on any income on a REMIC Residual Certificate that is excess inclusion income will not be subject to reduction under any applicable tax treaties. See "_Taxation of Owners of REMIC Residual Certificates_Excess Inclusions" above. If the portfolio interest exemption is unavailable, such amount will be subject to United States withholding tax when paid or otherwise distributed (or when the REMIC Residual Certificate is disposed of) under rules similar to those for withholding upon disposition of debt instruments that have OID. The Code, however, grants the Treasury Department authority to issue regulations requiring that those amounts be taken into account earlier than otherwise provided where necessary to prevent avoidance of tax (for example, where the REMIC Residual Certificates do not have significant value). See "_Taxation of Owners of REMIC Residual Certificates_Excess Inclusions" above. If the amounts paid to REMIC Residual Certificateholders that are not U.S. persons are effectively connected with their conduct of a trade or business within the United States, the 30% (or lower treaty rate) withholding will not apply. Instead, the amounts paid to such non-U.S. Person will be subject to U.S. federal income taxation at regular graduated rates. For special restrictions on the transfer of REMIC Residual Certificates, see "_Tax-Related Restrictions on Transfers of REMIC Residual Certificates" below. REMIC Regular Certificateholders and persons related to such holders should not acquire any REMIC Residual Certificates, and REMIC Residual Certificateholders and persons related to REMIC Residual Certificateholders should not acquire any REMIC Regular Certificates, without consulting their tax advisors as to the possible adverse tax consequences of such acquisition. TAX-RELATED RESTRICTIONS ON TRANSFERS OF REMIC RESIDUAL CERTIFICATES Disqualified Organizations. An entity may not qualify as a REMIC unless there are reasonable arrangements designed to ensure that residual interests in such entity are not held by "disqualified organizations" (as defined below). Further, a tax is imposed on the transfer of a residual interest in a REMIC to a "disqualified organization." The amount of the tax equals the product of (A) an amount (as determined under the REMIC Regulations) equal to the present value of the total anticipated "excess inclusions" with respect to such interest for periods after the transfer and (ii) the highest marginal federal income tax rate applicable to corporations. The tax is imposed on the transferor unless the transfer is through an agent (including a broker or other middleman) for a disqualified organization, in which event the tax is imposed on the agent. The person otherwise liable for the tax shall be relieved of liability for the tax if the transferee furnished to such person an affidavit that the transferee is not a disqualified organization and, at the time of the transfer, such person does not have actual knowledge that the affidavit is false. A "disqualified organization" means (A) the United States, any State, possession or political subdivision thereof, any foreign government, any international organization or any agency or instrumentality of any of the foregoing (provided that such term does not include an instrumentality if all its activities are subject to tax and, except for FHLMC, a majority of its board of directors is not selected by any such governmental agency), (B) any organization (other than certain farmers' cooperatives) generally exempt from federal income taxes unless such organization is subject to the tax on "unrelated business taxable income" and (C) a rural electric or telephone cooperative. A tax is imposed on a "pass-through entity" (as defined below) holding a residual interest in a REMIC if at any time during the taxable year of the pass-through entity a disqualified organization is the record holder of an interest in such entity. The amount of the tax is equal to the product of (A) the amount of excess inclusions for the taxable year allocable to the interest held by the disqualified organization and (B) the highest marginal federal income tax rate applicable to corporations. The pass-through entity otherwise liable for the tax, for any period during which the disqualified organization is the record holder of an interest in such entity, will be relieved of liability for the tax if such record holder furnishes to such entity an affidavit that such record holder is not a disqualified organization and, for such period, the pass-through entity does not have actual knowledge that the affidavit is false. For this purpose, a "pass-through entity" means (i) a regulated investment company, real estate investment trust or common trust fund, (ii) a partnership, trust or estate and (iii) certain cooperatives. Except as may be provided in Treasury regulations not yet issued, any person holding an interest in a pass-through entity as a nominee for another will, with respect to such interest, be treated as a pass-through entity. The tax on pass-through entities is generally effective for periods after March 31, 1988, except that in the case of regulated investment companies, real estate investment trusts, common trust funds and publicly-traded partnerships the tax shall apply only to taxable years of such entities beginning after December 31, 1988. Under proposed legislation, large partnerships (generally with 250 or more partners) will be taxable on excess inclusion income as if all partners were disqualified organizations. In order to comply with these rules, the Agreement will provide that no record or beneficial ownership interest in a REMIC Residual Certificate may be purchased, transferred or sold, directly or indirectly, without the express written consent of the Master Servicer. The Master Servicer will grant such consent to a proposed transfer only if it receives the following: (i) an affidavit from the proposed transferee to the effect that it is not a disqualified organization and is not acquiring the REMIC Residual Certificate as a nominee or agent for a disqualified organization and (ii) a covenant by the proposed transferee to the effect that the proposed transferee agrees to be bound by and to abide by the transfer restrictions applicable to the REMIC Residual Certificate. Noneconomic REMIC Residual Certificates. The REMIC Regulations disregard, for federal income tax purposes, any transfer of a Noneconomic REMIC Residual Certificate to a "U.S. Person," as defined above, unless no significant purpose of the transfer is to enable the transferor to impede the assessment or collection of tax. A Noneconomic REMIC Residual Certificate is any REMIC Residual Certificate (including a REMIC Residual Certificate with a positive value at issuance) unless, at the time of transfer, taking into account the Prepayment Assumption and any required or permitted clean up calls or required liquidation provided for in the REMIC's organizational documents, (i) the present value of the expected future distributions on the REMIC Residual Certificate at least equals the product of the present value of the anticipated excess inclusions and the highest corporate income tax rate in effect for the year in which the transfer occurs and (ii) the transferor reasonably expects that the transferee will receive distributions from the REMIC at or after the time at which taxes accrue on the anticipated excess inclusions in an amount sufficient to satisfy the accrued taxes. A significant purpose to impede the assessment or collection of tax exists if the transferor, at the time of the transfer, either knew or should have known that the transferee would be unwilling or unable to pay taxes due on its share of the taxable income of the REMIC. A transferor is presumed not to have such knowledge if (i) the transferor conducted a reasonable investigation of the transferee and (ii) the transferee acknowledges to the transferor that the residual interest may generate tax liabilities in excess of the cash flow and the transferee represents that it intends to pay such taxes associated with the residual interest as they become due. If a transfer of a Noneconomic REMIC Residual Certificate is disregarded, the transferor would continue to be treated as the owner of the REMIC Residual Certificate and would continue to be subject to tax on its allocable portion of the net income of the REMIC. Foreign Investors. The REMIC Regulations provide that the transfer of a REMIC Residual Certificate that has a "tax avoidance potential" to a "foreign person" will be disregarded for federal income tax purposes. This rule appears to apply to a transferee who is not a U.S. Person unless such transferee's income in respect of the REMIC Residual Certificate is effectively connected with the conduct of a United Sates trade or business. A REMIC Residual Certificate is deemed to have a tax avoidance potential unless, at the time of transfer, the transferor reasonably expect that the REMIC will distribute to the transferee amounts that will equal at least 30 percent of each excess inclusion, and that such amounts will be distributed at or after the time the excess inclusion accrues and not later than the end of the calendar year following the year of accrual. If the non-U.S. Person transfers the REMIC Residual Certificate to a U.S. Person, the transfer will be disregarded, and the foreign transferor will continue to be treated as the owner, if the transfer has the effect of allowing the transferor to avoid tax on accrued excess inclusions. The provisions in the REMIC Regulations regarding transfers of REMIC Residual Certificates that have tax avoidance potential to foreign persons are effective for all transfers after June 30, 1992. The Agreement will provide that no record or beneficial ownership interest in a REMIC Residual Certificate may be transferred, directly or indirectly, to a non-U.S. Person unless such person provides the Trustee with a duly completed IRS Form 4224 and the Trustee consents to such transfer in writing. Any attempted transfer or pledge in violation of the transfer restrictions shall be absolutely null and void and shall vest no rights in any purported transferee. Investors in REMIC Residual Certificates are advised to consult their own tax advisors with respect to transfers of the REMIC Residual Certificates and, in addition, pass-through entities are advised to consult their own tax advisors with respect to any tax which may be imposed on a pass-through entity. STATE TAX CONSIDERATIONS In addition to the federal income tax consequences described in "CERTAIN FEDERAL INCOME TAX CONSEQUENCES," potential investors should consider the state income tax consequences of the acquisition, ownership, and disposition of the Certificates. State income tax law may differ substantially from the corresponding federal law, and this discussion does not purport to describe any aspect of the income tax laws of any state. Therefore, potential investors should consult their own tax advisors with respect to the various tax consequences of investments in the Certificates. ERISA CONSIDERATIONS GENERAL The Employee Retirement Income Security Act of 1974, as amended ("ERISA") imposes certain restrictions on employee benefit plans and certain other retirement arrangements subject to ERISA ("Plans") and on persons who are parties in interest or disqualified persons ("parties in interest") with respect to such Plans. Certain employee benefit plans, such as governmental plans and church plans (if no election has been made under Code Section 410(d)), are not subject to the requirements of ERISA, and assets of such plans may be invested in Certificates without regard to the ERISA considerations described below, subject to the provisions of other applicable federal and state law. If the assets of the Trust were deemed to be plan assets, (i) the prudence standards and other provisions of Title I of ERISA applicable to investments by Plans and their fiduciaries would extend (as to all fiduciaries) to all assets of the Trust and (ii) transactions involving the assets of the Trust and parties in interest or disqualified persons with respect to such plans might be prohibited under ERISA Section 406 and Code Section 4975 unless an exemption is applicable. Under ERISA, parties in interest include, among others, fiduciaries, service providers and employers whose employees are covered by a Plan. A fiduciary with respect to a Plan is a person who (i) exercises any discretionary authority or discretionary control respecting management of a Plan or exercises any authority or control respecting management or disposition of its assets, (ii) renders investment advice for a fee or other compensation, direct or indirect, with respect to any monies or other property of such Plan, or has any authority or responsibility to do so, or (iii) has any discretionary authority or discretionary responsibility in the administration of such Plan. In considering an investment in the Certificates, a fiduciary should consider (i) whether the investment is prudent and in accordance with the documents and instruments governing the Plan and is appropriate for the Plan in light of the Plan's investment portfolio taken as a whole, (ii) whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of Title I of ERISA, and (iii) in the case of a Plan described in Code Section 401(a) ("Qualified Plan") or an individual retirement account ("IRA") whether the investment will result in unrelated business taxable income to the Qualified Plan or IRA. PLANS ASSETS ERISA standards of conduct are imposed on parties, such as fiduciaries, who have authority to deal with "plan assets." Final regulations defining plan assets in the context of plan investments in other entities have been issued by the Department of Labor ("Final Regulations"). The Final Regulations set forth the general rule that, when a Plan (which term shall include for purposes of this discussion Qualified Plans, IRAs and any other plan described in Code Section 4975 (a "Code Section 4975 Plan") invests in another entity, the Plan's assets include its investment, but do not, solely by reason of such investment, include any of the underlying assets of the entity. The general rule does not apply, however, if a Plan acquires an equity interest in an entity that is neither a publicly-offered security nor a security issued by an investment company registered under the Investment Company Act of 1940. If the general rule does not apply, a Plan's assets include both the equity interest and an undivided interest in each of the underlying assets of the entity, unless it is established that (i) the entity is an operating company or (ii) equity participation in the entity by benefit plan investors is not significant. Equity participation in the Trust would be considered significant if immediately after the most recent acquisition of any equity interest, 25% or more of the value of any class of equity interests in the Trust is held by Plan investors. In addition, the Final Regulations provide that where a Plan acquires a guaranteed government mortgage pool certificate, the Plan's assets include the certificate and all of its rights with respect to such certificate under applicable law, but do not, solely by reason of the Plan's holding of such certificate, include any of the mortgages underlying such certificate. The term "guaranteed governmental mortgage pool certificate" is defined as a certificate backed by, or evidencing an interest in, specified mortgages or participation interests therein, and with respect to which interest and principal payable pursuant to the certificate is guaranteed by the United States or an agency or instrumentality thereof. Although the Certificates may satisfy the governmental mortgage pool exemption set forth in the Final Regulations, no assurance can be given that the Department of Labor or any other authority would concur with such analysis. A "publicly-offered security" is one that is freely transferable, part of a class of securities that is widely held and is either (i) part of a class of securities registered under section 12(b) or 12(g) of the Exchange Act or (ii) sold as part of an offering of securities to the public pursuant to an effective registration statement under the 1933 Act and the class of securities of which such security is a part is registered under the Exchange Act within 120 days (or a later time as permitted by the Securities and Exchange Commission) after the end of the fiscal year of the issuer during which the offering of such securities to the public occurred. A class of securities is widely held only if it is a class of securities that is owned by 100 or more investors independent of the issuer and one another. It is unlikely that the Certificates offered hereby will be considered to be publicly-offered securities. PROHIBITED TRANSACTIONS A broad range of transactions between parties-in-interest and Plans are prohibited by ERISA. The acquisition of a Guaranteed Certificate by a Plan subject to ERISA or Code Section 4975 could result in prohibited transactions or other violations of the fiduciary responsibility provisions of ERISA and Code Section 4975. Certain exemptions from the prohibited transaction rules could be applicable, depending in part upon the type and circumstances of the Plan fiduciary making the decision to acquire a Guaranteed Certificate. Prohibited Transaction Class Exemption 83-1 ("PTCE 83-1") generally exempts from the application of the prohibited transaction rules transactions relating to the operation of a "mortgage pool" and the purchase, sale, and holding of "mortgage pool pass-through certificates," provided that certain conditions set forth in PTCE 83-1 are satisfied. The term "mortgage pool pass-through certificate" is defined in PTCE 83-1 as "a certificate representing a beneficial undivided fractional interest in a mortgage pool and entitling the holder of such a certificate to pass-through payments of principal and interest from the pooled mortgage loans, less any fees retained by the pool sponsor." The term "mortgage pool" is defined as an investment pool the corpus of which is held in trust and consists solely of (i) interest bearing obligations secured by either first or second mortgages or deeds of trust on single-family residential property, (ii) property which had secured such obligations and which had been acquired by foreclosure, and (iii) undistributed cash. Single-family, residential property is non- farm property comprising one to four dwelling units, including condominiums. It appears that, for purposes of PTCE 83-1, the term "mortgage pool pass-through certificate" would not include Certificates. If for this or any other reasons PTCE 83-1 does not provide an exemption for a particular Plan desiring to invest in the Certificates, one of three other prohibited transaction class exemptions issued by the Department of Labor might apply, i.e., PTCE 84-14 (Class Exemption for Plan Asset Transactions Determined by Independent Qualified Professional Asset Managers), PTCE 96-23 (Class Exemption for Plan Asset Transactions Determined by In-House Professional Asset Managers), PTCE 80-51 (Class Exemption for Certain Transactions Involving Bank Collective Investment Funds), PTCE 90-1 (Class Exemption for Certain Transactions Involving Insurance Company Pooled Separate Accounts) or PTCE 95-60 (Class Exemption for Certain Transactions Involving Insurance Company General Accounts). There can be no assurance that any of these class exemptions will apply with respect to any particular Plan desiring to invest in the Certificates or, even if it were to apply, that the exemption would apply to all transactions involving the Pool. Before purchasing any Certificates, a Plan fiduciary should determine whether any ERISA prohibited transaction exemption is applicable. Special caution should be exercised before the assets of a Plan are used to purchase a Certificate in circumstances where an affiliate of the Seller, the Originator, the Central Servicer, or the Trustee either: (a) has investment discretion with respect to the investment of such assets of such Plan or (b) has authority or responsibility to give, or regularly gives investment advice with respect to such assets for a fee and pursuant to an agreement or understanding that such advice will serve as a primary basis for investment decisions with respect to such assets and that such advice will be based on the particular investment needs of the Plan. Any Plan fiduciary considering whether to purchase any Certificates on behalf of a Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code to such investment. Each Plan fiduciary also should determine whether, under the general fiduciary standards of investment prudence and diversification, an investment in the Certificates is appropriate for the Plan taking into consideration the overall investment policy of the Plan and the composition of the Plan's investment portfolio. METHOD OF DISTRIBUTION The Certificates offered by the related Prospectus Supplements may be (i) issued to Sellers or originators in exchange for Qualified Loans or (ii) sold either directly or to underwriters for immediate resale in a public offering. The Prospectus Supplement for each Series of Certificates will set forth the method of distribution, and in the case of any sale to underwriters, will additionally set forth the terms of the offering of the Certificates of such Series offered thereby, including the name or names of the underwriters, the purchase price of such Certificates, the proceeds from such sale, and, in the case of an underwritten fixed price offering, the initial public offering price, the discounts and commissions to the underwriters and any discounts or concessions allowed or reallowed to certain dealers. The Certificates of a Series may be acquired by underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The obligations of any underwriters will be subject to certain conditions precedent and such underwriters will be severally obligated to purchase all of the Certificates of a Series offered by the Prospectus Supplement for such Series if any are purchased. If the Certificates of a Series are offered other than through underwriters, the Prospectus Supplement for such Series will contain information regarding the nature of such offering and any agreements to be entered into with respect to the purchase of such Certificates. The place and time of delivery for the Certificates of a Series in respect of which this Prospectus is delivered will be set forth in the Prospectus Supplement for such Series. LEGAL INVESTMENT The Certificates will constitute securities guaranteed by Farmer Mac for purposes of the Farmer Mac Charter and, as such, will, by statute, be legal investments for any persons, trusts, corporations, partnerships, associations, business trusts and business entities (including depository institutions, life insurance companies and pension funds) created pursuant to or existing under the laws of the United States or (except as indicated below) of any State (including the District of Columbia and Puerto Rico) to the same extent that, under applicable law, obligations issued by or guaranteed as to principal and interest by the United States or any agency or instrumentality thereof constitute legal investments for such entities. Under the Farmer Mac Charter, if a State enacted legislation prior to January 6, 1996 specifically limiting the legal investment authority of any state-chartered entities with respect to Farmer Mac guaranteed securities, such securities will constitute legal investments for entities subject to such legislation only to the extent provided therein. Farmer Mac is unaware of any state that has enacted such legislation prior to the deadline therefor in the Farmer Mac Charter. The Farmer Mac Charter thus allows federal savings and loan associations and federal savings banks to invest in Farmer Mac guaranteed securities without limitation as to the percentage of their assets represented thereby; federal credit unions to invest in Farmer Mac guaranteed securities without limitation as to percentage of capital and surplus; and national banks to purchase Farmer Mac guaranteed securities for their own account without regard to the limitation generally applicable to investment securities set forth in 12 U.S.C. 24 (Seventh), subject in each case to such regulations as the applicable federal regulatory authority may prescribe. In addition, on July 9, 1990, the Comptroller of the Currency issued an interpretation that Farmer Mac guaranteed securities of the type offered hereby are eligible for dealing in and underwriting by national banks. Relevant regulatory authorities may impose administrative restrictions on investment in Certificates with special characteristics, such as interest only and principal only certificates. Investors should consult their own legal advisors in determining whether and to what extent the Certificates constitute legal investments for such investors. INDEX OF PRINCIPAL TERMS Unless the context indicates otherwise, the following capitalized terms shall have the meanings set forth on the pages indicated below: 1933 Act........................................................ 23 1986 Act........................................................ 47 1991 Act........................................................ 22 1996 Amendment................................................ 5, 23 Accounts........................................................ 32 Accrual Certificates.......................................... 9, 24 Accrual Period.................................................. 53 Accrued Certificate Interest.................................... 25 Adjusted Issue Price............................................ 48 Advance...................................................... 11, 26 Agreements...................................................... 30 Agricultural Real Estate........................................ 6 AMBS............................................................ 5 AMBS Information................................................ 4 Applicable Amount............................................... 61 Appraisal Standards............................................. 15 ARM Loans.................................................... 17, 47 Balloon Payments................................................ 17 Beneficial Owners............................................... 28 Book-Entry Certificates......................................... 24 Borrower........................................................ 18 Central Servicer................................................ 5 Central Servicing Fee........................................... 35 Certificate Account............................................. 33 Certificate Account Deposit Date................................ 34 Certificate Balance........................................... 9, 25 Certificateholders........................................... 15, 28 Certificates.................................................. 1, 5 Class........................................................... 2 Cleanup Costs................................................... 39 Closing Date.................................................... 51 Code............................................................ 11 Code Section 4975 Plan.......................................... 68 Collection Account.............................................. 32 Commission...................................................... 3 ConAct.........................................................6, 18 Contributions Tax............................................... 63 CPR............................................................. 21 Cut-off Date.................................................... 10 Deferred Interest............................................... 48 Definitive Certificates.......................................24, 29 Depository...................................................... 28 Determination Date.............................................. 24 Disqualified Organizations...................................... 65 Distribution Date............................................... 9 Eligible Depository............................................. 32 Eligible Investment............................................. 32 ERISA.........................................................12, 67 Excess inclusion................................................ 61 Excess servicing................................................ 45 Exchange Act.................................................... 3 Farmer Mac................................................. 1, 5, 22 Farmer Mac Charter.............................................. 5 Farmer Mac Guarantee...........................................1, 22 FCA............................................................. 23 Fed System...................................................... 28 Final Regulations............................................... 68 Grantor Trust Certificates...................................... 11 Guaranteed Governmental Mortgage Pool Certificate............... 68 Guaranteed Portion..........................................1, 6, 18 Guides.......................................................... 6 Holders......................................................... 28 Indirect Participants........................................... 28 Insurance Proceeds.............................................. 33 IRA.......................................................... 12, 68 IRS............................................................. 43 Legislative History............................................. 47 Liquidation Proceeds............................................ 33 Master REMIC.................................................... 50 Master Servicer................................................. 5 Mortgage Interest Rate.......................................... 6 Mortgaged Notes................................................. 38 Mortgaged Pool.................................................. 69 Mortgaged Properties............................................ 6 OID.......................................................... 41, 43 OID Regulations................................................. 43 Originator...................................................... 22 Owner........................................................... 18 Participants.................................................... 28 Parties in interest............................................. 67 Pass-Through entity............................................. 66 Pass-Through Rate............................................. 9, 25 Payment Lag Certificates......................................... 57 Phantom income.................................................. 59 Plans........................................................... 67 Pool............................................................ 1 pre-issuance accrued interest................................... 57 Prepayment...................................................... 21 Prepayment Assumption........................................... 47 Prepayment Premiums............................................7, 13 Prohibited Transactions Tax..................................... 63 Proposed Mark-to-Market Regulations............................. 61 PTCE 83-169..................................................... 71 Publicly-Offered Security....................................... 68 Purchase Price.................................................. 31 QMBS........................................................... 1, 6 QMBS Agreement................................................... 17 QMBS Issuer...................................................... 17 QMBS Servicer.................................................... 17 QMBS Trustee..................................................... 17 Qualified Assets................................................. 1 Qualified Loans................................................ 1, 6 Qualified Mortgage............................................... 50 Qualified Plan................................................... 68 Record Date...................................................... 24 Related Proceeds................................................. 26 REMIC............................................................ 11 REMIC Certificates............................................... 50 REMIC Regular Certificateholders................................. 51 REMIC Regular Certificates................................... 11, 50 REMIC Regulations............................................... 41 REMIC Residual Certificateholder................................ 58 REMIC Residual Certificates.................................. 11, 50 REO Proceeds.................................................... 33 Sale Agreement.................................................. 8 Secretary's Guarantee........................................... 18 Sellers......................................................... 8 Series.......................................................... 1 State Environmental Lien........................................ 40 Stripped ARM Obligations........................................ 48 Stripped Bond Certificates...................................... 45 Stripped Coupon Certificates.................................... 45 Stripped Interest Certificates................................ 9, 24 Stripped Principal Certificates............................... 9, 23 Subsidiary REMIC................................................ 50 Super-Premium Certificates...................................... 52 System Institution.............................................. 23 Trust Assets.................................................... 3 Trust Fund...................................................... 1 Trust Fund AMBS................................................. 6 Trustee......................................................... 5 UCC............................................................. 28 Underwriting Standards.......................................... 15 Unguaranteed Portion............................................ 19 U.S. Person..................................................... 49 Yield Maintenance Charge...................................... 7, 13 No person has been authorized to give any information or to make any representations other than those not contained in this Prospectus Supplement or the Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Depositor or by the Underwriter. This Prospectus Supplement and the Prospectus do not constitute an offer to sell, or a solicitation of an offer to buy, the securities offered hereby by anyone in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make any such offer or solicitation. Neither the delivery of this Prospectus Supplement and the Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that information herein or therein is correct as of any time since the date of this Prospectus Supplement or the Prospectus. ______________ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT Page Summary of Terms......................................... S-4 Risk Factors............................................. S-9 Description of the Qualified Loans....................... S-9 Description of the Certificates.......................... S-12 Farmer Mac Guarantee..................................... S-14 Outstanding Guarantees................................... S-14 Yield, Prepayment and Maturity Considerations............ S-15 Description of the Agreements............................ S-18 The Depositor............................................ S-18 Certain Federal Income Tax Consequences.................. S-19 ERISA Considerations..................................... S-19 Legal Investment......................................... S-19 Method of Distribution................................... S-19 Legal Matters............................................ S-19 Index of Principal Terms................................. S-20 PROSPECTUS Prospectus Supplement...................................... 2 Available Information...................................... 3 Incorporation of Certain Documents by Reference............ 4 Summary of Prospectus...................................... 5 Risk Factors............................................... 13 Description of the Trust Funds............................. 15 Use of Proceeds............................................ 19 Yield Considerations....................................... 19 The Depositor.............................................. 22 Federal Agricultural Mortgage Corporation.................. 22 Description of the Certificates............................ 23 Description of the Agreements.............................. 30 Certain Legal Aspects of Qualified Loans and Other Matters. 38 Certain Federal Income Tax Consequences.................... 41 State Tax Considerations................................... 67 ERISA Considerations....................................... 67 Method of Distribution..................................... 70 Legal Investment........................................... 70 Index of Principal Terms................................... 72 ______________ Until 90 days after the date of this Prospectus Supplement, all dealers effecting transactions in the Certificates offered hereby, whether or not participating in this distribution, may be required to deliver a Prospectus Supplement and Prospectus to which it relates. This is in addition to the obligation of dealers to deliver a Prospectus Supplement and FarmerMac Acceptance Corporation (Depositor) $__________ (Approximate) Guaranteed Agricultural Mortgage Pass-Through Certificates Guaranteed by FARMER MAC Federal Agricultural Mortgage Corporation __________________ PROSPECTUS SUPPLEMENT __________________ [Underwriter] _______________, 1996 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRUBITION The estimated expenses expected to be incurred by the Registrant in connection with the issuance and distribution of the securities being registered, other than underwriting compensation, are as follows: SEC Registration Fee................................. $86,206.90 Trustee's Fees and Expenses (including counsel fees).. 25,000.00 Printing and Engraving Costs.......................... 40,000.00 Legal Fees and Expenses............................ 150,000.00 Accounting Fees and Expenses.......................... 40,000.00 Miscellaneous......................................... 8,793.10 Total............................................... 350,000.00 _________________________ ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The registrant's articles of incorporation provide that directors and officers of the registrant will be indemnified as permitted by Delaware law. Section 145 of the Delaware Corporation Law provides, in substance, that Delaware corporations have the power, under specified circumstances, to indemnify their directors, officers, employees or agents in connection with actions, suits or proceedings involving any of them by reason of the fact that they were or are such directors, officers, employees or agents, against expenses incurred in any such action, suit or proceeding. The form of Underwriting Agreement to be filed as Exhibit 1.1 to this Registration Statement provides under certain circumstances, for indemnification of the Registrant and other persons. ITEM 16. EXHIBITS. 1.1 Proposed Form of Underwriting Agreement 4.1 Proposed Form of Servicing Contract 4.2 Proposed Form of Loan Sale Agreement 4.3 Proposed Form of Trust Agreement - Grantor Trusts 4.4 Proposed Form of Trust Agreement - REMIC Trusts 5.1 Opinion of General Counsel of the Registrant 8.1 Opinion of Brown & Wood as to tax matters 23.1 The consent of the General Counsel of the Registrant is contained in the opinion filed as Exhibit 5.1 hereto. 23.2 The consent of Brown & Wood is contained in the opinion filed as Exhibit 8.1 hereto. 23.3 Consent of KPMG Peat Marwick LLP. 24.1 Power of Attorney (included in II-3 of this Registration Statement). _____________________________________ ITEM 17. UNDERTAKINGS A. Undertaking in respect of Rule 415 offering. "The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. B. Undertaking in respect of filings incorporating subsequent Exchange Act documents by reference. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. C. Undertaking in respect of indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. D. Undertakings for registration statement permitted by Rule 430A. The undersigned Registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this Registration Statement as of the time it was declared effective; and (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Washington, D.C. on the 19th day of June, 1996. FARMER MAC MORTGAGE SECURITIES CORPORATION By:/s/ Henry D. Edelman _________________________________________ Henry D. Edelman President Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-3 has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints Henry D. Edelman and Nancy E. Corsiglia, and each of them his or her true and lawful attorney-in-fact and agent, acting together or alone, with full powers of substitution and resubstitution, for them and in their name, place and stead, to sign any or all amendments to this Registration Statement (including any pre-effective or post-effective amendment), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, acting together or alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, acting together or alone, or other substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Signature Title Date Henry D. Edelman President and Director June 19, 1996 (Principal Executive Officer) Christopher A. Dunn Vice President and Director June 19, 1996 Nancy E. Corsiglia Vice President, Treasurer June 19, 1996 and Director (Principal Financial and Accounting Officer) EXHIBITS INDEX Sequential Exhibit Page No. Description of Exhibits Number 1.1 Proposed Form of Underwriting Agreement 4.1 Proposed Form of Servicing Contract 4.2 Proposed Form of Loan Sale Agreement 4.3 Proposed Form of Trust Agreement - Grantor Trusts 4.4 Proposed Form of Trust Agreement - REMIC Trusts 5.1 Opinion of General Counsel of the Registrant 8.1 Opinion of Brown & Wood as to tax matters 23.1 The consent of the General Counsel of the Registrant is contained in the opinion filed as Exhibit 5.1 hereto. 23.2 The consent of Brown & Wood is contained in the opinion filed as Exhibit 8.1 hereto. 23.3 Consent of KPMG Peat Marwick LLP. 24.1 Power of Attorney (included in II-3 of this Registration Statement). EX-1 2 EXHIBIT 1.1 PROPOSED FROM OF UNDERWRITING AGREEMENT FARMER MAC MORTGAGE SECURITIES CORPORATION GUARANTEED AGRICULTURAL MORTGAGE-BACKED SECURITIES (Issuable in Series) GUARANTEED BY FEDERAL AGRICULTURAL MORTGAGE CORPORATION UNDERWRITING AGREEMENT [Name of Underwriter] [Date] Ladies and Gentlemen: Farmer Mac Mortgage Securities Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Company"), may offer for sale to you (the "Underwriter") from time to time its Guaranteed Agricultural Mortgage-Backed Securities ("AMBS") evidencing interests in pools of agricultural real estate mortgage loans (the "Qualified Loans") and previously issued AMBS (the "Certificates"). The Certificates may be issued in various series, and within each series, in one or more classes, in one or more offerings on terms determined at the time of sale (each such series, a "Series" and each such class, a "Class"). Each Series of the Certificates will be issued pursuant to a Trust Agreement dated June 1, 1996 (the "Trust Agreement") as supplemented by an Issue Supplement (each, an "Issue Supplement" and together with the Trust Agreement, the "Agreement") to be dated as of the respective cut- off date (each, a "Cut-off Date") between the Company, as depositor, the Federal Agricultural Mortgage Corporation ("Farmer Mac"), as guarantor, and First Trust National Association, as trustee (the "Trustee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Agreement. The Certificates issued under the Agreement will represent the entire beneficial ownership interest in a trust fund (the "Trust Fund") established by such Agreement. If so specified in the related Terms Agreement, one or more elections may be made to treat the assets of each Trust Fund as a real estate mortgage investment conduit (each, a "REMIC") for federal income tax purposes. The Certificates will have the benefit of the guarantee of Farmer Mac (the "Farmer Mac Guarantee"). The Farmer Mac Guarantee will guarantee the timely payment of required distributions of interest and principal on the Certificates as described in the related Issue Supplement. Whenever the Company determines to make an offering of Certificates (each, a "Certificate Offering") pursuant to this Agreement through you, it will enter into an agreement with you (the "Terms Agreement") providing for the sale of specified Classes of Offered Certificates (as defined below) to, and the purchase and public offering thereof by, you. Each such Certificate Offering which the Company elects to make pursuant to this Agreement shall be governed by this Underwriting Agreement, as supplemented by the related Terms Agreement. Each Terms Agreement, which shall be substantially in the form of Exhibit A hereto, shall specify, among other things, the Classes of Certificates to be purchased by the Underwriter (the "Offered Certificates"), the principal balance or balances of the Offered Certificates, each subject to any stated variance, and the price or prices at which such Offered Certificates are to be purchased by the Underwriter from the Company. 1. Representations and Warranties. (a) The Company represents and warrants to and agrees with the Underwriter, as of the date of the related Terms Agreement, that: (i) The registration statement specified in the related Terms Agreement, on Form S-3, including a prospectus, has been filed with the Securities and Exchange Commission (the "Commission") for the registration under the Securities Act of 1933, as amended (the "Act"), of guaranteed agricultural mortgage-backed securities issuable in series, which registration statement has been declared effective by the Commission. Such registration statement, as amended to the date of the related Terms Agreement, including any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act which were filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the effective date of the Registration Statement, is hereinafter called the "Registration Statement", and such prospectus, as such prospectus is supplemented by a prospectus supplement relating to the Offered Certificates of the related Series, each in the form first filed after the date of the related Terms Agreement pursuant to Rule 424(b) under the Act, including any documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act which were filed under the Exchange Act on or before the date of such prospectus supplement (other than any such incorporated documents that relate to Collateral Term Sheets (as defined herein))(such prospectus supplement, including such incorporated documents (other than those that relate to Collateral Term Sheets), in the form first filed after the date of the related Terms Agreement pursuant to Rule 424(b) is hereinafter called the "Prospectus Supplement"), is hereinafter called the "Prospectus". Any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement, the Prospectus or the Prospectus Supplement shall be deemed to refer to and include the filing of any document under the Exchange Act after the effective date of the Registration Statement or the issue date of the Prospectus or Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference pursuant to Item 12 of Form S-3 under the Act. (ii) The related Registration Statement, at the time it became effective, and the Prospectus contained therein, and any amendments thereof and supplements thereto filed prior to the date of the related Terms Agreement, conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder; on the date of the related Terms Agreement and on each Closing Date (as defined in Section 3 below), the related Registration Statement and the related Prospectus, and any amendments thereof and supplements thereto, will conform in all material respects to the requirements of the Act and the rules and regulations of the Commission thereunder; such Registration Statement, at the time it became effective, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; such Prospectus, on the date of any filing pursuant to Rule 424(b) and on each Closing Date, will not include any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they are made, not misleading; and any Form 8-K referred to in such Prospectus, on each Closing Date and the date of any filing thereof under cover of Form 8-K, will not include any untrue statement of a material fact or omit to state any information which such Prospectus states will be included therein; provided, however, that the Company makes no representations or warranties as to the information contained in or omitted from (A) such Registration Statement or such Prospectus (or any supplement thereto) in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Underwriter specifically for use in the preparation thereof or (B) any Current Report (as defined in Section 5(b) below), or in any amendment thereof or supplement thereto, incorporated by reference in such Registration Statement or such Prospectus (or any amendment thereof or supplement thereto). (iii) On the Closing Date, the Certificates of the related Series will have been duly and validly authorized, and when executed and authenticated in accordance with the terms of the Agreement and sold to the Underwriter as provided herein, will be validly issued and entitled to the benefits of the Agreement. (iv) On the Closing Date, the Farmer Mac Guarantee will be in full force and effect and constitute a valid and binding agreement of Farmer Mac enforceable in accordance with its terms. 2. Purchase and Sale. Subject to the execution of the Terms Agreement for a particular Certificate Offering and subject to the terms and conditions and in reliance upon the representations and warranties set forth in this Underwriting Agreement and such Terms Agreement, the Company agrees to sell to the Underwriter, and the Underwriter agrees to purchase from the Company, all, but not less than all, of the related Offered Certificates at the purchase price therefor set forth in such Terms Agreement (the "Purchase Price"). The parties hereto agree that settlement for all securities sold pursuant to this Underwriting Agreement and the applicable Terms Agreement shall take place on the settlement date agreed upon at the time of the related transaction and set forth as the "Closing Date" in such Terms Agreement and not as set forth in Rule 15c6-1(a) of the Exchange Act. 3. Delivery and Payment. Delivery of and payment for the Offered Certificates of a Series shall be made at the offices of the Company, Washington, D.C., at 10:00 A.M., New York City time, on the Closing Date specified in the related Terms Agreement, which date and time may be postponed by agreement between the Underwriter and the Company (such date and time being herein called the "Closing Date"). Delivery of such Offered Certificates shall be made to the Underwriter against payment by the Underwriter of the Purchase Price thereof to or upon the order of the Company by wire transfer in federal or other immediately available funds or by check payable in federal funds, as the Company shall specify no later than five full business days prior to such Closing Date. Unless delivery is made through the facilities of the U.S. Federal Reserve Banks, the Offered Certificates shall be in certificated form and registered in such names and in such authorized denominations as the Underwriter may request not less than two full business days in advance of each Closing Date. 4. Offering by the Underwriter. It is understood that the Underwriter proposes to offer the Offered Certificates of the related Series for sale to the public as set forth in the related Prospectus. 5. Agreements. The Company and Farmer Mac jointly and severally agree with the Underwriter that: (a) The Company will cause the Prospectus as supplemented by a Prospectus Supplement relating to the Offered Certificates to be filed pursuant to Rule 424 under the Act and will promptly advise the Underwriter when such Prospectus as so supplemented has been so filed, and prior to the termination of the Certificate Offering to which such Prospectus relates also will promptly advise the Underwriter (i) when any amendment to the related Registration Statement specifically relating to such Offered Certificates shall have become effective or any further supplement to such Prospectus has been filed, (ii) of any request by the Commission for any amendment of such Registration Statement or Prospectus or for any additional information, (iii) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement or the institution or threatening of any proceeding for that purpose and (iv) of the receipt by the Company of any written notification with respect to the suspension of the qualification of such Offered Certificates for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company will not file any amendment of the related Registration Statement or supplement to the related Prospectus (other than any amendment or supplement specifically relating to one or more Series of guaranteed agricultural mortgage-backed securities other than the Series that includes the related Offered Certificates) unless the Company has furnished the Underwriter with a copy for its review prior to filing. The Company will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. (b) The Company will cause any Computational Materials and any Structural Term Sheets (each as defined in Section 8 below) with respect to the Offered Certificates of a Series that are delivered by the Underwriter to the Company pursuant to Section 8 to be filed with the Commission on a Current Report on Form 8-K (each such filing of such materials, a "Current Report") pursuant to Rule 13a- 11 under the Exchange Act on the business day immediately following the later of (i) the day on which such Computational Materials and Structural Term Sheets are delivered to counsel for the Company by the Underwriter prior to 10:30 a.m. and (ii) the date on which this Agreement is executed and delivered. The Company will cause one Collateral Term Sheet (as defined in Section 9 below) with respect to the Offered Certificates of a Series that is delivered by the Underwriter to the Company in accordance with the provisions of Section 9 to be filed with the Commission on a Current Report pursuant to Rule 13a-11 under the Exchange Act on the business day immediately following the day on which such Collateral Term Sheet is delivered to counsel for the Company by the Underwriter prior to 10:30 a.m. In addition, if at any time prior to the availability of the related Prospectus Supplement the Underwriter has delivered to any prospective investor a Collateral Term Sheet that reflects, in the reasonable judgment of the Underwriter and the Company, a material change in the characteristics of the Qualified Loans for the related Series from those on which a Collateral Term Sheet with respect to the related Series previously filed with the Commission was based, the Company will cause any such Collateral Term Sheet that is delivered by the Underwriter to the Company in accordance with the provisions of Section 9 to be filed with the Commission on a Current Report on the business day immediately following the day on which such Collateral Term Sheet is delivered to counsel for the Company by the Underwriter prior to 10:30 a.m. In each case, the Company will promptly advise the Underwriter when such Current Report has been so filed. Each such Current Report shall be incorporated by reference in the related Prospectus and the related Registration Statement. Notwithstanding the five preceding sentences, the Company shall have no obligation to file any materials provided by the Underwriter pursuant to Sections 8 and 9 which, in the reasonable determination of the Company after making reasonable efforts to consult with the Underwriter, are not required to be filed pursuant to the Kidder Letters or the PSA Letter (each as defined in Section 8 below), or which contain erroneous information or contain any untrue statement of a material fact or, when read in conjunction with the Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood, however, that the Company shall have no obligation to review or pass upon the accuracy or adequacy of, or to correct, any Computational Materials, Structural Term Sheets or Collateral Term Sheets provided by the Underwriter to the Company pursuant to Section 8 or Section 9 hereof. (c) If, at any time when a prospectus relating to the Offered Certificates of a Series is required to be delivered under the Act, any event occurs as a result of which the related Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, or if it shall be necessary at any time to amend or supplement the related Prospectus to comply with the Act or the rules thereunder, the Company promptly will prepare and file with the Commission, subject to paragraph (a) of this Section 5, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance; provided, however, that the Company will not be required to file any such amendment or supplement with respect to any Computational Materials, Structural Term Sheets or Collateral Term Sheets incorporated by reference in the Prospectus other than any amendments or supplements of such Computational Materials or Structural Term Sheets that are furnished to the Company by the Underwriter pursuant to Section 8(e) hereof or any amendments or supplements of such Collateral Term Sheets that are furnished to the Company by the Underwriter pursuant to Section 9(d) hereof which the Company determines to file in accordance therewith. (d) Whether or not the transactions contemplated hereby and by the related Terms Agreement shall be consummated, the Company shall be responsible for the payment of any costs and expenses for which details are submitted, in connection with the performance of its obligations under this Underwriting Agreement and the related Terms Agreement. The Underwriter will pay all its own costs and expenses, including the fees of Stroock & Stroock & Lavan, counsel for the Underwriter, transfer taxes on resale of any Offered Certificates by it, advertising expenses connected with any offers that it may make, the fees of KPMG Peat Marwick LLP with respect to any letter furnished pursuant to Section 6(c) of this Agreement to the extent such letter or letters do not relate to collateral information on the related Qualified Loans for the related Certificate Offering and all expenses (e.g., shipping, postage and courier costs) associated with the delivery of the related Prospectus to prospective investors and investors, other than the costs of delivery to the Underwriter's facilities. 6. Conditions to the Obligations of the Underwriter. The obligation of the Underwriter to purchase the Offered Certificates of any Series shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company or Farmer Mac contained in this Agreement, as supplemented by the related Terms Agreement, as of the respective dates thereof and the related Closing Date, to the accuracy of the statements of the Company or Farmer Mac made in any applicable officers' certificates pursuant to the provisions hereof, to the performance by the Company or Farmer Mac of each of its obligations under this Agreement and such Terms Agreement and to the following additional conditions applicable to the related Certificate Offering: (a) No stop order suspending the effectiveness of the related Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. (b) Michael T. Bennett, General Counsel of the Company and Farmer Mac, shall have furnished to the Underwriter an opinion, dated the related Closing Date, to the effect as set forth in Exhibit B hereto. (c) KPMG Peat Marwick LLP shall have furnished to the Underwriter one or more letters, in form and substance satisfactory to the Underwriter. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects with respect to the particular Offered Certificates of a Series when and as provided in this Underwriting Agreement and the related Terms Agreement, this Agreement (with respect to such Offered Certificates) and such Terms Agreement and all obligations of the Underwriter hereunder (with respect to such Offered Certificates) and thereunder may be canceled at, or at any time prior to, the related Closing Date by the Underwriter. Notice of such cancellation shall be given to the Company in writing, or by telephone or telecopy confirmed in writing. 7. Indemnification and Contribution. (a) The Company and Farmer Mac agree, jointly and severally, to indemnify and hold harmless the Underwriter and each person who controls the Underwriter within the meaning of the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act, or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement relating to the Offered Certificates of the applicable Series as it became effective or in any amendment or supplement thereof, or in such Registration Statement or the related Prospectus, or in any amendment thereof, or in the Form 8- K referred to in such Prospectus or arise out of or are based upon the omission or alleged omission (in the case of any Computational Materials or ABS Term Sheets (in each case, as defined herein) in respect of which the Company and Farmer Mac agree to indemnify the Underwriter, as set forth below, when such are read in conjunction with the related Prospectus and Prospectus Supplement) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Company and Farmer Mac will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein (A) in reliance upon and in conformity with written information furnished to the Company as herein stated by or on behalf of the Underwriter specifically for use in connection with the preparation thereof or (B) in any Current Report or any amendment or supplement thereof, except to the extent that any untrue statement or alleged untrue statement therein or omission therefrom results (or is alleged to have resulted) directly from an error (a "Mortgage Pool Error") in the information concerning the characteristics of the Mortgage Loans furnished by the Company to the Underwriter in writing or by electronic transmission that was used in the preparation of either (x) any Computational Materials or ABS Term Sheets (or amendments or supplements thereof) included in such Current Report (or amendment or supplement thereof) or (y) any written or electronic materials furnished to prospective investors on which the Computational Materials (or amendments or supplements) were based, (ii) such indemnity with respect to any Corrected Statement (as defined below) in such Prospectus (or supplement thereto) shall not inure to the benefit of the Underwriter (or any person controlling the Underwriter) from whom the person asserting any loss, claim, damage or liability purchased the Certificates of the related Series that are the subject thereof if such person did not receive a copy of a supplement to such Prospectus at or prior to the confirmation of the sale of such Certificates and the untrue statement or omission of a material fact contained in such Prospectus (or supplement thereto) was corrected (a "Corrected Statement") in such other supplement and such supplement was furnished by the Company to the Underwriter prior to the delivery of such confirmation, and (iii) such indemnity with respect to any Mortgage Pool Error shall not inure to the benefit of the Underwriter (or any person controlling the Underwriter) from whom the person asserting any loss, claim, damage or liability received any Computational Materials (or any written or electronic materials on which the Computational Materials are based) or ABS Term Sheets that were prepared on the basis of such Mortgage Pool Error, if, prior to the time of confirmation of the sale of the applicable Certificates to such person, the Company notified the Underwriter in writing of the Mortgage Pool Error or provided in written or electronic form information superseding or correcting such Mortgage Pool Error (in any such case, a "Corrected Mortgage Pool Error"), and the Underwriter failed to notify such person thereof or to deliver to such person corrected Computational Materials (or underlying written or electronic materials) or ABS Term Sheets. This indemnity agreement will be in addition to any liability which the Company or Farmer Mac may otherwise have. (b) The Underwriter agrees to indemnify and hold harmless the Company and Farmer Mac, each of its directors, each of its officers who signs the Registration Statement relating to the Offered Certificates of the applicable Series, and each person who controls the Company or Farmer Mac within the meaning of the Act or the Exchange Act to the same extent as the foregoing indemnities from the Company and Farmer Mac to the Underwriter, but only with reference to (A) written information furnished to the Company by or on behalf of the Underwriter specifically for use in the preparation of the documents referred to in the foregoing indemnity with respect to the related Series, or (B) any Computational Materials or ABS Term Sheets (or amendments or supplements thereof) furnished to the Company by the Underwriter pursuant to Section 8 or Section 9 and incorporated by reference in such Registration Statement or the related Prospectus or any amendment or supplement thereof (except that no such indemnity shall be available for any losses, claims, damages or liabilities, or actions in respect thereof, resulting from any Mortgage Pool Error, other than a Corrected Mortgage Pool Error). This indemnity agreement will be in addition to any liability which the Underwriter may otherwise have. The Company acknowledges that the statements set forth [TO COME] constitute the only information furnished in writing by or on behalf of the Underwriter for inclusion in the related Prospectus (other than any Computational Materials or ABS Term Sheets (or amendments or supplements thereof) furnished to the Company by the Underwriter), and the Underwriter confirms that such statements are correct. (c) Promptly after receipt by an indemnified party under Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 7. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 7 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel approved by the indemnified party in the case of subparagraph (a) or (b), representing the indemnified parties under subparagraph (a) or (b), who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party; and except that, if clause (i) or (iii) is applicable, such liability shall be only in respect of the counsel referred to in such clause (i) or (iii). (d) If the indemnification provided for in paragraph (a) or (b) of this Section 7 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Company, Farmer Mac or the Underwriter, on grounds of policy or otherwise, or if the indemnified party failed to give notice under paragraph (c) of this Section 7 in respect of a claim otherwise subject to indemnification in accordance with paragraph (a) or (b) of this Section 7, the Company, Farmer Mac and the Underwriter shall contribute to the aggregate losses, claims, damages and liabilities (including legal and other expenses reasonably incurred in connection with investigating or defending same) to which the Company, Farmer Mac and the Underwriter may be subject, as follows: (i) in the case of any losses, claims, damages and liabilities (or actions in respect thereof) which do not arise out of or are not based upon any untrue statement or omission of a material fact in any Computational Materials or ABS Term Sheets (or any amendments or supplements thereof), in such proportion so that the Underwriter is responsible for that portion represented by the difference between the proceeds to the Company and Farmer Mac in respect of the Offered Certificates appearing on the cover page of the Prospectus Supplement for the related Series and the total proceeds received by the Underwriter from the sale of such Offered Certificates (the "Underwriting Discount"), and the Company is responsible for the balance; and (ii) in the case of any losses, claims, damages and liabilities (or actions in respect thereof) which arise out of or are based upon any untrue statement or omission of a material fact in any Computational Materials or ABS Term Sheets (or any amendments or supplements thereof) or in any written or electronic materials distributed to prospective investors on which the Computational Materials are based, in such proportion as is appropriate to reflect the relative fault of the Company and Farmer Mac on the one hand and the Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact in such Computational Materials or ABS Term Sheets (or any amendments or supplements thereof or such written or electronic materials) results from information prepared by the Company on the one hand or the Underwriter on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding anything to the contrary in this Section 7(d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls the Underwriter within the meaning of either the Act or the Exchange Act shall have the same rights to contribution as the Underwriter, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company or Farmer Mac shall have the same rights to contribution as the Company and Farmer Mac, subject in each case to the immediately preceding sentence of this paragraph (d). 8. Computational Materials and Structural Term Sheets. (a) Not later than 10:30 a.m., New York time, on the business day before the date on which the Current Report relating to the Offered Certificates of a Series is required to be filed by the Company with the Commission pursuant to Section 5(b) hereof, the Underwriter shall deliver to the Company one complete copy of all materials provided by the Underwriter to prospective investors in such Offered Certificates that constitute (i) "Computational Materials" within the meaning of the no-action letter dated May 20, 1994 issued by the Division of Corporation Finance of the Commission to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset Corporation and the no-action letter dated May 27, 1994 issued by the Division of Corporation Finance of the Commission to the Public Securities Association (together, the "Kidder Letters"), the filing of which material is a condition of the relief granted in such letter (such materials being the "Computational Materials"), and (ii) "Structural Term Sheets" within the meaning of the no-action letter dated February 17, 1995 issued by the Division of Corporation Finance of the Commission to the Public Securities Association (the "PSA Letter"), the filing of which material is a condition of the relief granted in such letter (such materials being the "Structural Term Sheets"). (b) The Underwriter represents and warrants to and agrees with the Company, as of the date of the related Terms Agreement and as of the Closing Date, that: (i) the Computational Materials furnished to the Company pursuant to Section 8(a) constitute (either in original, aggregated or consolidated form) all of the materials furnished to prospective investors by the Underwriter prior to the time of delivery thereof to the Company that are required to be filed with the Commission with respect to the related Offered Certificates in accordance with the Kidder Letters, and such Computational Materials comply with the requirements of the Kidder Letters; (ii) the Structural Term Sheets furnished to the Company pursuant to Section 8(a) constitute all of the materials furnished to prospective investors by the Underwriter prior to the time of delivery thereof to the Company that are required to be filed with the Commission as "Structural Term Sheets" with respect to the related Offered Certificates in accordance with the PSA Letter, and such Structural Term Sheets comply with the requirements of the PSA Letter; and (iii) on the date any such Computational Materials or Structural Term Sheets with respect to such Offered Certificates (or any written or electronic materials furnished to prospective investors on which the Computational Materials are based) were last furnished to each prospective investor and on the date of delivery thereof to the Company pursuant to Section 8(a) and on the related Closing Date, such Computational Materials (or such other materials) or Structural Term Sheets did not and will not include any untrue statement of a material fact or, when read in conjunction with the related Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Notwithstanding the foregoing, the Underwriter makes no representation or warranty as to whether any Computational Materials or Structural Term Sheets (or any written or electronic materials on which the Computational Materials are based) included or will include any untrue statement resulting directly from any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect to materials prepared after the receipt by the Underwriter from the Company of notice of such Corrected Mortgage Pool Error or materials superseding or correcting such Corrected Mortgage Pool Error). (c) The Underwriter acknowledges and agrees that any Computational Materials or Structural Term Sheets with respect to any Series of Certificates have been prepared and disseminated by the Underwriter and not by or on behalf of the Company, and that such materials included and shall include a disclaimer in form satisfactory to the Company to the effect that such materials have been prepared and disseminated by the Underwriter, and that the content and accuracy of such materials have not been reviewed by the Company. (e) If, at any time when a prospectus relating to the Offered Certificates of a Series is required to be delivered under the Act, it shall be necessary to amend or supplement the related Prospectus as a result of an untrue statement of a material fact contained in any Computational Materials or Structural Term Sheets provided by the Underwriter pursuant to this Section 8 or the omission to state therein a material fact required, when considered in conjunction with the related Prospectus and Prospectus Supplement, to be stated therein or necessary to make the statements therein, when read in conjunction with the related Prospectus and Prospectus Supplement, not misleading, or if it shall be necessary to amend or supplement any Current Report relating to any Computational Materials or Structural Term Sheets to comply with the Act or the rules thereunder, the Underwriter promptly will prepare and furnish to the Company for filing with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. The Underwriter represents and warrants to the Company, as of the date of delivery of such amendment or supplement to the Company, that such amendment or supplement will not include any untrue statement of a material fact or, when read in conjunction with the related Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Underwriter makes no representation or warranty as to whether any such amendment or supplement will include any untrue statement resulting directly from any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect to any such amendment or supplement prepared after the receipt by the Underwriter from the Company of notice of such Corrected Mortgage Pool Error or materials superseding or correcting such Corrected Mortgage Pool Error). The Company shall have no obligation to file such amendment or supplement if the Company determines that (i) such amendment or supplement contains any untrue statement of a material fact or, when read in conjunction with the related Prospectus and Prospectus Supplement, omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood, however, that the Company shall have no obligation to review or pass upon the accuracy or adequacy of, or to correct, any such amendment or supplement provided by the Underwriter to the Company pursuant to this paragraph (e) or (ii) such filing is not required under the Act. 9. Collateral Term Sheets. (a) Prior to the delivery of any "Collateral Term Sheet" within the meaning of the PSA Letter, the filing of which material is a condition of the relief granted in such letter (such material being the "Collateral Term Sheets"), to a prospective investor in any Offered Certificates, the Underwriter shall, in order to facilitate the timely filing of such material with the Commission, notify the Company and its counsel by telephone of its intention to deliver such materials and the approximate date on which the first such delivery of such materials is expected to occur. Not later than 10:30 a.m., New York time, on the business day immediately following the date on which any Collateral Term Sheet was first delivered to a prospective investor in such Offered Certificates, the Underwriter shall deliver to the Company five complete copies of all materials provided by the Underwriter to prospective investors in the Offered Certificates that constitute "Collateral Term Sheets." Each delivery of a Collateral Term Sheet to the Company pursuant to this paragraph (a) shall be effected by delivering one copy of such materials to the Company. (Collateral Term Sheets and Structural Term Sheets are, together, referred to herein as "ABS Term Sheets.") At the time of each such delivery, the Underwriter shall indicate in writing that the materials being delivered constitute Collateral Term Sheets, and, if there has been any prior such delivery with respect to the related Series, shall indicate whether such materials differ in any material respect from any Collateral Term Sheets previously delivered to the Company with respect to such Series pursuant to this Section 9(a) as a result of the occurrence of a material change in the characteristics of the related Mortgage Loans. (b) The Underwriter represents and warrants to and agrees with the Company as of the date of the related Terms Agreement and as of the Closing Date, that: (i) The Collateral Term Sheets furnished to the Company pursuant to Section 9(a) constitute all of the materials furnished to prospective investors by the Underwriter prior to time of delivery thereof to the Company that are required to be filed with the Commission as "Collateral Term Sheets" with respect to the related Offered Certificates in accordance with the PSA Letter, and such Collateral Term Sheets comply with the requirements of the PSA Letter; and (ii) On the date any such Collateral Term Sheets with respect to such Offered Certificates were last furnished to each prospective investor and on the date of delivery thereof to the Company pursuant to Section 9(a) and on the related Closing Date, such Collateral Term Sheets did not and will not include any untrue statement of a material fact or, when read in conjunction with the Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Notwithstanding the foregoing, the Underwriter makes no representation or warranty as to whether any Collateral Term Sheet included or will include any untrue statement or material omission resulting directly from any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect to materials prepared after the receipt by the Underwriter from the Company of notice of such Corrected Mortgage Pool Error or materials superseding or correcting such Corrected Mortgage Pool Error). (c) The Underwriter acknowledges and agrees that any Collateral Term Sheets with respect to any Series of Certificates furnished to prospective investors from and after the date hereof will have been prepared and disseminated by the Underwriter and not by or on behalf of the Company, and that such materials shall include a disclaimer in form satisfactory to the Company to the effect set forth in Section 8(d) hereof, and to the effect that the information contained in such materials supersedes the information contained in any prior Collateral Term Sheet with respect to such Series of Offered Certificates and will be superseded by the description of the related Mortgage Loans in the related Prospectus Supplement and in the Form 8-K relating to such Prospectus Supplement to be filed. The Underwriter agrees that it will not represent to prospective investors that any Collateral Term Sheets were prepared or disseminated on behalf of the Company or Farmer Mac. (d) If, at any time when a prospectus relating to the Offered Certificates of a Series is required to be delivered under the Act, it shall be necessary to amend or supplement the related Prospectus as a result of an untrue statement of a material fact contained in any Collateral Term Sheets provided by the Underwriter pursuant to this Section 9 or the omission to state therein a material fact required, when considered in conjunction with the related Prospectus and Prospectus Supplement, to be stated therein or necessary to make the statements therein, when read in conjunction with the related Prospectus and Prospectus Supplement, not misleading, or if it shall be necessary to amend or supplement any Current Report relating to any Collateral Term Sheets to comply with the Act or the rules thereunder, the Underwriter promptly will prepare and furnish to the Company for filing with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. The Underwriter represents and warrants to the Company, as of the date of delivery of such amendment or supplement to the Company, that such amendment or supplement will not include any untrue statement of a material fact or, when read in conjunction with the related Prospectus and Prospectus Supplement, omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, the Underwriter makes no representation or warranty as to whether any such amendment or supplement will include any untrue statement resulting directly from any Mortgage Pool Error (except any Corrected Mortgage Pool Error, with respect to any such amendment or supplement prepared after the receipt by the Underwriter from the Company of notice of such Corrected Mortgage Pool Error or materials superseding or correcting such Corrected Mortgage Pool Error). The Company shall have no obligation to file such amendment or supplement if the Company determines that (i) such amendment or supplement contains any untrue statement of a material fact or, when read in conjunction with the related Prospectus and Prospectus Supplement, omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading; it being understood, however, that the Company shall have no obligation to review or pass upon the accuracy or adequacy of, or to correct, any such amendment or supplement provided by the Underwriter to the Company pursuant to this paragraph (d) or (ii) such filing is not required under the Act. 10. Termination. This Agreement (with respect to a particular Certificate Offering) and the related Terms Agreement shall be subject to termination in the absolute discretion of the Underwriter, by notice given to the Company prior to delivery of and payment for the related Offered Certificates, if prior to the related Closing Date (i) trading in securities generally on the New York Stock Exchange shall have been suspended or materially limited, (ii) a general moratorium on commercial banking activities in New York shall have been declared by either federal or New York State authorities, or (iii) there shall have occurred any outbreak or material escalation of hostilities or other calamity or crisis the effect of which on the financial markets of the United States is such as to make it, in the reasonable judgment of the Underwriter, impracticable to market such Offered Certificates. 11. Representations and Indemnities to Survive Delivery. The agreements, representations, warranties, indemnities and other statements of the Company and Farmer Mac or its respective officers and of the Underwriter set forth in or made pursuant to this Agreement and the related Terms Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Underwriter, the Company or Farmer Mac or any of the officers, directors or controlling persons referred to in Section 7 hereof, and will survive delivery of and payment for the related Offered Certificates. The provisions of Section 7 hereof shall survive the termination or cancellation of this Agreement and the related Terms Agreement. 12. Successors. This Agreement and the related Terms Agreement will inure to the benefit of and be binding upon the parties hereto and thereto and their respective successors and the officers, directors and controlling persons referred to in Section 7 hereof, and their successors and assigns, and no other person will have any right or obligation hereunder or thereunder. No purchaser of any Offered Certificate from the Underwriter shall be deemed a successor or assign by reason of such purchase. 13. APPLICABLE LAW. THIS AGREEMENT AND THE RELATED TERMS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN. 14. Miscellaneous. This Agreement, as supplemented by the related Terms Agreement, supersedes all prior and contemporaneous agreements and understandings relating to the subject matter hereof. This Agreement and the related Terms Agreement or any term of each may not be changed, waived, discharged or terminated except by an affirmative written agreement made by the party against whom enforcement of the change, waiver, discharge or termination is sought. The headings in this Agreement and the related Terms Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof or thereof. 15. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Underwriter, will be delivered to it at the address first above written; or if sent to the Company or Farmer Mac, will be delivered to 919 18th Street, N.W. Washington, D.C. 20006, Attention: General Counsel. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the undersigned a counterpart hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company, Farmer Mac and the Underwriter. Very truly yours, FARMER MAC MORTGAGE SECURITIES CORPORATION By:____________________________________ Name: Title: FEDERAL AGRICULTURAL MORTGAGE CORPORATION By:___________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. [UNDERWRITER] By:_____________________________ Name: Title: EXHIBIT A FARMER MAC MORTGAGE SECURITIES CORPORATION Guaranteed Agricultural Mortgage-Backed Securities Series 1996- Guaranteed by the Federal Agricultural Mortgage Corporation TERMS AGREEMENT (to Underwriting Agreement, dated _____________,____ among the Company, Farmer Mac and the Underwriter) Farmer Mac Mortgage Securities Corporation [Date] 919 18th Street, N.W. Washington D.C. 20006 Federal Agricultural Mortgage Corporation 919 18th Street, N.W. Washington D.C. 20006 [Name of Underwriter] (the "Underwriter") agrees, subject to the terms and provisions herein and of the captioned Underwriting Agreement (the "Underwriting Agreement"), to purchase the Classes of Series Certificates specified in Section 1(a) hereof (the "Offered Certificates"). This Terms Agreement supplements and modifies the Underwriting Agreement solely as it relates to the purchase and sale of the Offered Certificates described below. The Series Certificates are registered with the Securities and Exchange Commission by means of an effective Registration Statement (No. 33- ). Capitalized terms used and not defined herein have the meanings given them in the Underwriting Agreement. Section 1. The Certificates: The Offered Certificates shall be issued as follows: (a) Classes: The Offered Certificates shall be issued with the following Class designations, interest rates and principal balances, subject in the aggregate to the variance referred to in Section 1(a): Principal Interest Class Purchase Class Balance Rate Price Percentage (b) The Offered Certificates shall have such other characteristics as described in the related Prospectus. Section 2. Purchase Price: The Purchase Price for each Class of the Offered Certificates shall be the Class Purchase Price Percentage therefor (determined as set forth in Section 1(a) above) of the initial Class Certificate Principal Balance thereof plus accrued interest at the initial interest rate per annum from and including the Cut-off Date up to, but not including, , ("the Closing Date"). Section 3. Tax Treatment: [One or more elections will be made to treat the assets of the Trust Fund as a REMIC.] If the foregoing is in accordance with your understanding of our agreement, please sign and return to the undersigned a counterpart hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Underwriter, the Company and Farmer Mac. Very truly yours, [UNDERWRITER] By:_____________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. FARMER MAC MORTGAGE SECURITIES CORPORATION By: _____________________________________ Name: Title: FEDERAL AGRICULTURAL MORTGAGE CORPORATION By: _________________________________ Name: Title: EXHIBIT B [Farmer Mac Letterhead] [Date] [Underwriter] Re: Farmer Mac Guaranteed Agricultural Mortgage-Backed Securities Series Ladies and Gentlemen: I am the Vice President and General Counsel of the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States ("Farmer Mac"), and in such capacity have acted as counsel to Farmer Mac and Farmer Mac Mortgage Securities Corporation (the "Company") in connection with the issuance and sale of $[ ] aggregate principal amount of Guaranteed Agricultural Mortgage-Backed Securities, Series 1996-[ ], (the "Certificates"), to you (the "Underwriter") pursuant to the Underwriting Agreement dated June [ ], 1996 (the "Underwriting Agreement"), as supplemented by the Terms Agreement dated June [ ], 1996 (the "Terms Agreement"), each by and among the Company, Farmer Mac and the Underwriter. The Certificates have been issued pursuant to a Trust Agreement dated as of June 1, 1996 (the "Trust Agreement"), as supplemented by an Issue Supplement dated June [ ], 1996 (the "Issue Supplement" and together with the Trust Agreement, the "Agreement"), by and among the Company, as depositor, Farmer Mac, as guarantor, and First Trust National Association, as trustee (the "Trustee"). Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. In arriving at the opinions expressed below, I have made such legal and factual examinations and inquiries, and have examined and relied upon originals or copies, certified or otherwise identified to my satisfaction, of such other certificate, corporate records, agreements and other instruments and documents, as I have deemed advisable or necessary for the purpose of rendering this opinion. Based upon the foregoing and my consideration of such other matters of fact and questions of law as I have deemed relevant in the circumstances, I am of the opinion that: (i) Farmer Mac has been duly incorporated and is validly existing as a federally chartered instrumentality of the United States, pursuant to Title VIII of the Farmer Credit Act of 1971, as amended (the "Act"), and has statutory authority under the Act to enter into and perform its obligations under the Agreement, the Underwriting Agreement and Terms Agreement and to consummate the transactions contemplated thereby. (ii) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to enter into and perform its obligations under the Agreement, the Underwriting Agreement and Terms Agreement and to consummate the transactions contemplated thereby. (iii) When duly issued and outstanding, the Certificates will be entitled to the benefits of the Agreement and the Farmer Mac Guarantee to the extent described in the Issue Supplement. In rendering the opinions set forth above, I do not express any independent opinion concerning law other than the Delaware General Corporation Law, the laws of the District of Columbia and the federal law of the United States of America. This opinion is delivered to you pursuant to the Underwriting Agreement and in connection with the transactions contemplated thereby and may not be relied upon by you or any other person in any other context without my prior written consent. This opinion is given as of the date hereof and I assume no obligation to advise you of changes that may thereafter be brought to my attention. Very truly yours, EX-2 3 EXHIBIT 4.1 PROPOSED FORM OF SERVICING CONTRACT MASTER CENTRAL SERVICING AGREEMENT between FEDERAL AGRICULTURAL MORTGAGE CORPORATION, as Owner/Master Servicer and [NAME OF CENTRAL SERVICER], as Central Servicer dated as of June 1, 1996 MASTER CENTRAL SERVICING AGREEMENT THIS MASTER CENTRAL SERVICING AGREEMENT (this "Agreement") entered into as of June 1, 1996, between the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States and an institution of the Farm Credit System ("Farmer Mac") and [Name of Central Servicer], a [ ] (the "Central Servicer"). WITNESSETH WHEREAS, Farmer Mac is the beneficial owner of certain agricultural real estate mortgage loans and Master Servicer with respect to certain other agricultural real estate mortgage loans; and WHEREAS, Farmer Mac and the Central Servicer have agreed that the Central Servicer is to service on behalf of Farmer Mac certain of such agricultural real estate mortgage loans (the "Qualified Loans") to be identified on the Schedule of Qualified Loans (as hereinafter defined) attached to each Central Servicing Supplement. NOW, THEREFORE, in consideration of these premises, the parties agree as follows: ARTICLE I DEFINED TERMS Section 1.01 Defined Terms. All capitalized terms used but not defined herein have the meanings assigned to them in the Securities Guide and the following terms shall have the following meanings: "Amount Held for Future Distribution": As to any Remittance Date, the total of all amounts held in the Collection Account at the close of business on such Remittance Date on account of (i) Installment Payments due after the preceding Due Date and (ii) prepayments received after the preceding Due Date. "Appraisal Standards": The appraisal standards established by Farmer Mac and set forth in the Securities Guide. "Appraised Value": The appraised value of a Mortgaged Property as indicated on the Schedule of Qualified Loans, which is the appraised value based upon the appraisal conducted in accordance with the Appraisal Standards less than one year prior to Farmer Mac's acquisition of the Qualified Loan. "Borrower": The obligor under a Qualified Loan. "Business Day": Any other day than (i) a Saturday or a Sunday, (ii) a day on which banking institutions in the States of Minnesota, New York or [Central Servicer's jurisdiction] are required or authorized by law to be closed or (iii) a day on which Farmer Mac is closed. "Central Servicer": [ ], and in its permitted successors and assigns. "Central Servicer Advance": As to any Remittance Date, the amounts advanced by the Central Servicer as specified in the definition of Central Servicer Advance Requirement. "Central Servicer Advance Requirement": The amount, if any, required to be advanced by the Central Servicer on any Remittance Date, such amount being equal to the total of all Installment Payments (with each interest component thereof being adjusted to interest at the applicable Net Mortgage Rate) on the Qualified Loans (including, for this purpose, REO Qualified Loans) that were due on or prior to the preceding Due Date, and such Installments Payments were not the subject of any previous unreimbursed Central Servicer Advance and were known by the Central Servicer to be past due (irrespective of any moratorium, waiver or other postponement) as of the close of business on such related Remittance Date; provided, however, that no such advance in respect of a particular Qualified Loan shall be required on any Remittance Date to the extent the Central Servicer determines that any such advance if made would be a Nonrecoverable Advance. "Central Servicer's Report": A report (which shall be in electronic machine readable form) of the Central Servicer to Farmer Mac and Farmer Mac's designee, if any, conforming to Section 4.01. "Central Servicing Supplement": An instrument substantially in the form of Exhibit B hereto executed by Farmer Mac and the Central Servicer pursuant to Section 2.01 hereof which supplements this Master Central Servicing Agreement and identifies the Qualified Loans the Central Servicing of which is being delegated to the Central Servicer by Farmer Mac on the Closing Date identified therein and sets forth the terms of the servicing of such Qualified Loans. "Closing Date": As identified in the Central Servicing Supplement. "Collection Account": The Eligible Account or Accounts created and maintained pursuant to Section 3.02. Funds required to be deposited in the Collection Account shall be held in trust for Farmer Mac. "Collection Period": As defined in the Central Servicing Supplement. "Cut-Off Date": As defined in the Central Servicing Supplement. "Due Date": As to any Qualified Loan, any date upon which a scheduled installment of principal and interest on such Qualified Loan is due in accordance with the terms of the related Mortgage Note. "Eligible Account": An account that is either (i) maintained with a depository institution the obligations of which would qualify as Permitted Investments pursuant to clause (iii) of the definition thereof, (ii) an account or accounts the deposits in which are fully insured by the Federal Deposit Insurance Corporation or (iii) an account or accounts in a depository institution acting in its fiduciary capacity in which the deposits in such accounts are held in trust and are invested in an account as described in (i) or (ii) above or in Permitted Investments. Funds deposited in each Eligible Account shall be held in trust pending application in accordance with the provisions of this Agreement. "Eligible Substitute Mortgaged Property": A Mortgaged Property that is substituted for an Existing Mortgaged Property pursuant to Section 3.02(a) which, as evidenced by an Servicing Officer's certificate delivered to Farmer Mac, shall: (i) secure the same Qualified Loan that such Existing Mortgaged Property secures; and (ii) on the date of substitution, have a current appraised value at least equal to the Appraised Value of such Existing Mortgaged Property. "Environmental Review Report": The report required to be prepared pursuant to the Securities Guide prior to the foreclosure or other conversion of any defaulted Qualified Loan. "Environmental Statute": Any Federal, state or local law, ordinance, rule or regulation including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended; the Hazardous Materials Transportation Act, as amended; the Resource Conservation and Recovery Act, as amended; and any regulations adopted and publications promulgated pursuant to each of the foregoing. "Existing Mortgaged Property": A Mortgaged Property that is replaced by an Eligible Substitute Mortgaged Property pursuant to Section 3.02(a). "Farmer Mac": The Federal Agricultural Mortgage Corporation, a federally chartered institution of the Farm Credit System and instrumentality of the United States, or any successor corporation or entity or Farmer Mac's designee. The term Farmer Mac, when used to refer to the entity owning the Qualified Loans, shall also include any entity designated by Farmer Mac to be the holder of the Qualified Loans. "Field Servicer": Any Person with whom the Central Servicer has entered into a Servicing Agreement or any Person who otherwise is acting as a Field Servicer. "Field Servicing Fee Rate": As to any Qualified Loan, the per annum rate identified as the Field Servicing Fee Rate in the Schedule of Qualified Loans. "Hazardous Materials": Any flammable explosives, radioactive materials or any other materials, wastes or substances defined as hazardous materials, hazardous wastes or hazardous or toxic substances by any Environmental Statute or by any Federal, state or local governmental authority having or claiming jurisdiction over the Mortgaged Property. "Independent": When used with respect to any specified Person, such a Person who (i) is in fact independent of the Seller and the Central Servicer, (ii) does not have any direct financial interest or any material indirect financial interest in the Seller or the Central Servicer or in an affiliate thereof, and (iii) is not connected with the Seller or the Central Servicer as an officer, employee, promoter, underwriter, partner, director or person performing similar functions. "Installment Payment": As to any Qualified Loan and any Due Date, any payment of principal and/or interest thereon in accordance with the amortization schedule of such Qualified Loan (after adjustment for any curtailments occurring prior to the Due Date but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period). "Insurance Proceeds": Proceeds paid to Farmer Mac or the Central Servicer (including any Field Servicer) by any insurer pursuant to any insurance policy covering a Qualified Loan or Mortgaged Property, reduced by any expenses incurred by Farmer Mac or the Central Servicer (including any Field Servicer) in connection with the collection of such Insurance Proceeds and not otherwise reimbursed to Farmer Mac or the Central Servicer, such expenses including, without limitation, legal fees and expenses. "Insured Expenses": Expenses covered by any insurance policy covering a Qualified Loan or Mortgaged Property that are paid by or on behalf of Farmer Mac or the Central Servicer. "Liquidated Qualified Loan": Any defaulted Qualified Loan (including any REO Qualified Loan) as to which the Central Servicer has determined that all amounts it expects to recover from or on account of such Qualified Loan have been recovered and have been deposited into the Collection Account. "Liquidation Expenses": Expenses incurred by or on behalf of Farmer Mac or the Central Servicer in connection with the liquidation of any defaulted Qualified Loan, including, without limitation, legal fees and expenses, brokerage commissions paid to third parties, any unreimbursed amounts expended by Farmer Mac or the Central Servicer pursuant to Sections 3.05(a), 3.07(a) and 3.07(e) (to the extent such amounts are reimbursable under the terms of such Sections) respecting the related Qualified Loan and any related and unreimbursed expenditures for real estate and conveyance taxes or for property restoration or preservation. Liquidation Expenses shall not include any previously incurred expenses in respect of a defaulted Qualified Loan that have been netted against related REO Proceeds, and shall not include Insured Expenses. "Liquidation Proceeds": Cash (including Insurance Proceeds) received in connection with the liquidation of defaulted Qualified Loans and REO Qualified Loans, whether through trustee's sale, foreclosure sale or otherwise. "Loan-to-Value Ratio": As of any date, the fraction, expressed as a percentage, the numerator of which is the principal balance of the related Qualified Loan at the date of determination and the denominator of which is the Appraised Value of the related Mortgaged Property as of the date of the appraisal performed in accordance with the Appraisal Standards. "Mortgage": A mortgage, deed of trust or other instrument that constitutes a first lien on an interest in real property securing a Mortgage Note. "Mortgage File": The legal documents (including the Mortgage Note, Mortgage, assignment of the Mortgage, evidence of title to the Mortgaged Property and any additional security documents) relating to a Qualified Loan. "Mortgage Note": The originally executed note or other evidence of indebtedness evidencing the indebtedness of a Borrower under a Qualified Loan. "Mortgage Rate": As to any Qualified Loan, the rate of interest borne by the related Mortgage Note. "Mortgage Servicing Documents": The custodial documents, servicing documents, escrow documents, if any, the original appraisal, including any updates thereto, which was the basis for the Appraised Value, and all other documents, records, and tapes necessary for prudent servicing in accordance with the Central Servicer's standards for mortgage loan servicing, and such other papers and documents, tax receipts, insurance policies, insurance premium receipts, water stock certificates, ledger sheets, payment records, insurance claim files and correspondence, foreclosure files and correspondence, current and historical computerized data files and other papers and records of whatever kind or description. "Mortgaged Property": The property securing a Qualified Loan. "Net Liquidation Proceeds": As to any Liquidated Qualified Loan, Liquidation Proceeds net of Liquidation Expenses not theretofore reimbursed to the Central Servicer. "Net Mortgage Rate": As to each Qualified Loan, the Mortgage Rate less the sum of (a) the Servicing Fee Rate and (b) the Field Servicing Fee Rate. "Net REO Proceeds": As to any REO Qualified Loan, REO Proceeds net of any related and otherwise unreimbursed expenses of the Central Servicer. "Nonrecoverable Advance": Any portion of a Central Servicer Advance previously made or proposed to be made in respect of a Qualified Loan which has not been previously reimbursed to the Central Servicer and which, in the good faith judgment of the Central Servicer, will not or, in the case of a proposed Central Servicer Advance, would not be ultimately recoverable from future Borrower payments or from Net Liquidation Proceeds, REO Proceeds or other recoveries in respect of the related Qualified Loan. The determination by the Central Servicer that it has made a Nonrecoverable Advance or that any proposed advance, if made, would constitute a Nonrecoverable Advance shall be evidenced by a written certification of a Servicing Officer delivered to Farmer Mac, stating (i) the amount of such Nonrecoverable Advance and (ii) that the Central Servicer has determined in good faith that such advance is or would be a Nonrecoverable Advance in accordance with the terms hereof and setting forth the reasons therefor. "Permitted Investments": One or more of the following, but only to the extent permitted by applicable regulations: (i) obligations of, or guaranteed as to principal and interest by, Farmer Mac or the United States or any agency or instrumentality thereof; (ii) repurchase agreements on obligations specified in clause (i), which repurchase agreements will mature not later than the day preceding the immediately following Remittance Date, provided that (a) the unsecured short-term obligations of the party agreeing to repurchase such obligations are at the time rated not less than A-1 by Standard & Poor's and not less than Prime-1 by Moody's, (b) such repurchase agreements are effected with a primary dealer recognized by a Federal Reserve Bank or (c) such repurchase agreements are secured by obligations specified in clause (i) above at not less than 102% of market value determined on a daily basis; (iii) demand and time deposits in, certificates of deposit of, or bankers' acceptances maturing in not more than 60 days and issued by, any depository institution or trust company incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal and/or state banking authorities, so long as at the time of such investment or contractual commitment providing for such investment the commercial paper or other short-term debt obligations of such depository institution or trust company (or, in the case of a depository institution that is the principal subsidiary of a holding company, the commercial paper or other short-term obligations of such holding company) have a rating of not less than A-1 from Standard & Poor's and a rating of not less than Prime-1 from Moody's; (iv) commercial paper (having remaining maturities of not more than 60 days) of any corporation incorporated under the laws of the United States or any state thereof, which on the date of acquisition has been rated not less than A-1 from Standard & Poor's and not less than Prime-1 by Moody's; and (v) securities bearing interest or sold at a discount issued by any corporation incorporated under the laws of the United States of America or any state thereof if such securities are rated in the highest long-term unsecured rating categories at the time of investment or the contractual commitment providing for such investment by Standard & Poor's and Moody's; provided, however, that securities issued by any particular corporation will not be Permitted Investments to the extent that investment therein will cause the then outstanding principal amount of securities issued by such corporation and held as part of the Collection Account to exceed 10% of the outstanding principal balance of the Qualified Loans being serviced under this Agreement (it being understood that the entity directing the investment shall be responsible for compliance with the foregoing restriction on investments); (vi) units of a taxable money-market portfolio rated "P-1" by Moody's and "AAAm" by Standard & Poor's and restricted to investments in obligations issued or guaranteed by the United States of America or entities whose obligations are backed by the full faith and credit of the United States of America and repurchase agreements collateralized by such obligations; (vii) units of a taxable money-market portfolio restricted to investments which would be `Permitted Investments' under paragraphs (i) through (vi) of this definition of `Permitted Investments'; and (viii) other obligations or securities that are acceptable to (and specified in writing by) Farmer Mac. The foregoing is qualified to the extent that no instrument described above shall be a Permitted Investment if such instrument evidences either (x) a right to receive only interest payments with respect to the obligations underlying such instrument or (y) both principal and interest payments derived from obligations underlying such instrument and the interest and principal payments with respect to such instrument provide a yield to maturity of greater than 120% of the yield to maturity at par of such underlying obligations. "Person": Any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Principal Prepayment": Any payment (other than an Installment Payment) or other recovery of principal on a Qualified Loan that is received in advance of its scheduled Due Date. "Principal Prepayment in Full": Any payment received on a Qualified Loan that is in excess of the installment of principal and interest due thereon in an amount sufficient to pay the entire principal balance of such Qualified Loan. "Purchase Price": With respect to any Qualified Loan to be purchased on any date pursuant to Section 3.07(g), an amount equal to the sum of (i) 100% of the unpaid principal balance thereof as shown on the Schedule of Qualified Loans less any principal payments made in respect of such Qualified Loan; (ii) the unpaid accrued interest at the Net Mortgage Rate on the unpaid principal balance thereof from the Due Date to which interest was last paid by the Borrower to the next Due Date for such Qualified Loan; and (iii) if the date of purchase by the Central Servicer occurs after the Qualified Loan has been securitized, any Yield Maintenance Amount that would be payable under the terms of the related Mortgage Note as if a Principal Prepayment in Full were made on the date of purchase by the Central Servicer and such Yield Maintenance Amount were calculated based on interest accruing at the Net Mortgage Rate less the sum of (x) the Guarantee Fee Rate and (y) the Trustee Fee Rate (each of the Guarantee Fee Rate and the Trustee Fee Rate having the meaning given such term in the applicable securitization documents). "Qualified Loan Receipts": With respect to any Collection Period, an amount equal to (a) the sum of (i) the amount attributable to the Qualified Loans that is on deposit in the Collection Account as of the close of business on the following Remittance Date, including Borrower payments, including any related Central Servicer Advance Requirement, Net REO Proceeds and Net Liquidation Proceeds and any amount deposited in the Collection Account after the preceding Remittance Date in respect of defaulted Qualified Loans purchased by the Central Servicer or the Seller pursuant to Section 3.07(g) and (ii) any amount on deposit in the Collection Account on the Due Date(s) in such Collection Period in respect of the repurchase of any Qualified Loan repurchased by the seller thereof, reduced by (b) the sum of (i) any Amount Held for Future Distribution and (ii) all amounts permitted to be retained by the Central Servicer pursuant to Section 3.02 or withdrawn by the Central Servicer from the Collection Account in respect of the Qualified Loans pursuant to clauses (ii) through (iv), inclusive, of Section 3.04(a). "Qualified Loans": As defined in the recitals. "Recourse Obligation": A Mortgage Note that permits the mortgagee thereunder to seek a deficiency judgment that is enforceable under applicable state law. "Remittance Account": The account or accounts established by Farmer Mac into which the Central Servicer will make deposits on each Remittance Date. "Remittance Date": As to any Collection Period, the 15th day (or if such 15th day is not a Business Day, the next succeeding Business Day) of the month in which such Collection Period ends. "REO Account": The account established by the Central Servicer in which it shall segregate all funds collected and received in connection with the operation of any REO Qualified Loans separate and apart from its own funds and general assets and held in trust for the benefit of Farmer Mac, which shall be an Eligible Account and may be located in the same account as the Collection Account, but as to which separate records (or entries) shall be maintained. "REO Principal Amortization Amount": With respect to any REO Qualified Loan for any Remittance Date (other than an REO Qualified Loan which has a Scheduled Principal Balance of zero), any amount transferred during the preceding Collection Period to the REO Account and not allocated pursuant to clauses first and second of Section 3.07(c). "REO Proceeds": Proceeds, other than Liquidation Proceeds, received in respect of any REO Qualified Loan (including, without limitation, proceeds from the rental of the related Mortgaged Property). "REO Property": Any Mortgaged Property that has been acquired by Farmer Mac (or an assignee of Farmer Mac and as to which Farmer Mac is the master servicer) by foreclosure, deed-in- lieu of foreclosure or otherwise. "REO Qualified Loan": Any Qualified Loan that is not a Liquidated Qualified Loan and as to which the related Mortgaged Property is held by Farmer Mac (or an assignee of Farmer Mac and as to which Farmer Mac is the master servicer). "Schedule of Qualified Loans": The list of Qualified Loans the servicing of which has been assigned by Farmer Mac to the Central Servicer on the applicable Closing Date and attached to and made part of the Central Servicing Supplement in the form and containing the information set forth in Attachment I thereto, which list may be amended from time to time by Farmer Mac and the Central Servicer. Such schedule, which shall be in hard copy and in machine readable format to Farmer Mac and the Central Servicer shall be prepared by Farmer Mac (based on information provided to Farmer Mac by the seller of the Qualified Loans) and may consist of multiple reports that collectively set forth all of the information requested. "Securities Guide": The publication entitled "Federal Agricultural Mortgage Corporation Securities Guide," release dated April 10, 1992, as modified by any guide update or bulletin or as replaced by any other publication of Farmer Mac identified by Farmer Mac as a "Servicing Guide." "Servicing Agreement": An agreement between the Central Servicer and a Field Servicer providing for the servicing and administration of some or all of the Qualified Loans by such Field Servicer. A Servicing Agreement does not relieve the Central Servicer of any of its duties or obligations under this Agreement. "Servicing Fee Rate": As to any Qualified Loan, the per annum rate identified as the Central Servicing Fee Rate in the Schedule of Qualified Loans. "Servicing Officer": Any officer of the Central Servicer involved in, or responsible for, the administration and servicing of the Qualified Loans whose name and specimen signature appears on a list of servicing officers furnished to Farmer Mac by the Central Servicer on the Closing Date, as such list may from time to time be amended by delivery of written notice by an existing Servicing Officer. "Standard Hazard Insurance Policy": A standard fire insurance policy with extended coverage, which shall provide standard coverage against loss by fire, lightning, windstorm, hail, explosion, riot not attending a strike, civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief. "Yield Maintenance Amount": As to any Qualified Loan, the amount payable by the Borrower thereunder in connection with a Principal Prepayment thereof (whether voluntary or involuntary) or other acceleration by the legal holder thereof upon a default by such Borrower thereunder, as specified in the Mortgage Note. ARTICLE II MORTGAGE SERVICING DOCUMENTS Section 2.01 Mortgage Servicing Documents. Not later than each Closing Date, the Central Servicer shall be in possession of the Mortgage Servicing Documents with respect to each Qualified Loan. To the extent such Mortgage Servicing Documents are not in the possession of the Central Servicer, the Central Servicer will immediately notify Farmer Mac in writing of the missing documents. ARTICLE III CENTRAL SERVICING OF QUALIFIED LOANS Section 3.01. Central Servicer to Act as Servicer. (a) Commencing with each Closing Date, the Central Servicer shall service the Qualified Loans (including REO Qualified Loans) identified in the related Schedule of Qualified Loans in conformity with this Agreement and the Securities Guide as it applies to the Qualified Loans and shall have full power and authority, acting alone and/or through field servicers as provided in Section 3.15, to do any and all things which it may deem necessary or desirable in connection with such servicing. (b) Without limiting the generality of the foregoing, the Central Servicer is hereby authorized and empowered by Farmer Mac when the Central Servicer believes it appropriate, in its best judgment, but consistent with and subject to the terms of this Agreement, to execute and deliver, on behalf of Farmer Mac, any and all instruments of satisfaction or cancellation, or of partial or full release or discharge and all other comparable instruments, with respect to the Qualified Loans and with respect to the Mortgaged Properties. Farmer Mac shall cause the Central Servicer to be furnished from time to time with such Powers of Attorney and other documents necessary or appropriate to enable the Central Servicer to service and administer the Qualified Loans upon the request of the Central Servicer. The Central Servicer shall provide Farmer Mac with the form of any such Power(s) of Attorney or other document(s) (reasonably acceptable to Farmer Mac) and Farmer Mac agrees to cause such Power(s) of Attorney or other documents to be executed and returned promptly after hard copy receipt thereof by Farmer Mac. Farmer Mac acknowledges and understands that the Central Servicer may submit Power(s) of Attorney to Farmer Mac on an annual basis for recording each year in accordance with local law requirements, and Farmer Mac agrees to cause such Power(s) of Attorney to be executed and returned as provided in the preceding sentence. Section 3.02. Collection of Certain Qualified Loan Payments; Collection Account. (a) The Central Servicer shall, consistent with this Agreement and, to the extent not inconsistent with the Securities Guide, in accordance with customary industry standards for agricultural mortgage loan servicing, make reasonable efforts to collect all payments called for under the terms and provisions of the Qualified Loans. The Central Servicer may in its discretion waive, postpone, reschedule, modify or otherwise compromise the terms of payment of any Qualified Loan so long as any such waiver, postponement, rescheduling, modification or compromise shall not be inconsistent with this Agreement, or be consented to in advance in writing by Farmer Mac. No such arrangement shall alter or modify the amortization schedule of such Qualified Loan for purposes of calculating any Central Servicer Advance Requirement in respect thereof without the prior written consent of Farmer Mac. In addition, the Central Servicer may in its discretion permit the substitution of an Eligible Substitute Mortgaged Property for an Existing Mortgaged Property so long as the Mortgage Note relating to the Qualified Loan that the Existing Mortgaged Property secures is a Recourse Obligation. The Central Servicer may waive, in whole or in part, the obligation of a Borrower to pay a Yield Maintenance Amount only with the prior written consent of Farmer Mac. (b) The Central Servicer shall establish and maintain a Collection Account in its name for the benefit of Farmer Mac (and for which Farmer Mac shall bear any costs and expenses incurred with respect to withdrawals with respect to Remittance Date) in which the Central Servicer shall deposit as promptly as practicable following receipt (but in no event later than one (1) Business Day following receipt) except as otherwise specifically provided herein or in a Central Servicing Supplement, the following payments and collections received by it subsequent to the Cut-Off Date (other than in respect of principal and interest on the Qualified Loans due on or before the Cut-Off Date): (i) All payments on account of principal on the Qualified Loans; (ii) All payments on account of interest on the Qualified Loans adjusted, in each case, to interest at the applicable Net Mortgage Rate, except that the portion of any such payment on account of interest accruing on any delinquent Installment Payment with respect to which a Central Servicer Advance is outstanding need not be deposited in the Collection Account; (iii) Net Liquidation Proceeds, Net REO Proceeds and Insurance Proceeds (other than Insurance Proceeds to be applied to the restoration or repair of the related Mortgaged Property or released to the Borrower in accordance with the Central Servicer's normal servicing procedures) net of any amounts permitted to be withheld by the Central Servicer as servicing compensation pursuant to Section 3.09 or permitted to be paid to the Central Servicer pursuant to the last sentence of Section 3.07(e) and not paid directly by Farmer Mac; (iv) All proceeds of any Qualified Loans purchased by the Central Servicer or repurchased by the seller of such Qualified Loan; (v) All Yield Maintenance Amounts paid by Borrowers; (vi) Any deposit required by the second paragraph of Section 3.05(a); and (vii) Any late charge or interest on the Qualified Loans accruing at a default rate related to delinquent Installment Payments with respect to which no Central Servicer Advance was made. Notwithstanding the foregoing, the Central Servicer shall not be required to deposit and may retain late collections, including Liquidation Proceeds, Insurance Proceeds and REO Proceeds to the extent of unpaid Central Servicer Advances and servicing advances with respect to the related Qualified Loans. The foregoing requirements for deposit in the Collection Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments or collections in the nature of late payment charges, assumption fees or other service charges imposed upon Borrowers in connection with servicing the Qualified Loans may but need not be deposited by the Central Servicer in the Collection Account. In the event the Central Servicer shall deposit in the Collection Account any amount not required to be deposited therein, it may at any time withdraw such amount from the Collection Account, any provision herein to the contrary notwithstanding. (c) The Central Servicer shall cause the institution with which the Collection Account is maintained to invest the funds in the Collection Account attributable to the Qualified Loans in those Permitted Investments specified in writing by Farmer Mac which shall mature in immediately available funds not later than the day preceding the next Remittance Date and shall not be sold or disposed of prior to maturity. All earnings and gains realized from any such investments in the Collection Account shall be for the benefit of Farmer Mac. The amount of any losses or expenses incurred in connection with the investment of amounts in the Collection Account shall be deducted from the amount to be distributed to Farmer Mac. (d) The Central Servicer shall give notice to Farmer Mac of the location of the Collection Account, and of any change in the location thereof, prior to the use thereof. Section 3.03. Payment of Taxes, Assessments and Other Items; Advances by Central Servicer. (a) The Central Servicer shall use its best efforts to cause the Borrowers to pay any taxes, assessments, Standard Hazard Insurance Policy premiums, or other charges with respect to which the failure to pay would result in a lien on the related Mortgaged Property by operation of law or comparable items relating to the Mortgaged Properties. (b) The Central Servicer shall advance the payments referred to in subsection (a) that are not timely paid by the Borrowers on the date when the tax, premium or other cost for which such payment is intended is due, but the Central Servicer shall be required so to advance only (x) to the extent necessary, in the good faith judgment of the Central Servicer, to protect Farmer Mac against any loss and (y) so long as in the good faith judgment of the Central Servicer, such advances ultimately would be recoverable from payments (other than Installment Payments) made by the Borrower or from Liquidation Proceeds. Section 3.04. Permitted Withdrawals from the Collection Account; Maintenance of Accounting Records. (a) The Central Servicer may, from time to time as provided herein, make withdrawals from the Collection Account for the following purposes: (i) to make distributions to Farmer Mac on each Remittance Date; (ii) at any time to withdraw any amount deposited in the Collection Account that was not required to be deposited therein pursuant to Section 3.02(b); (iii) to reimburse itself for previously unreimbursed Central Servicer Advances and servicing advances, the Central Servicer's right to withdraw amounts pursuant to this clause (iii) being limited to amounts received on particular Qualified Loans (including, for this purpose, Borrower payments, Insurance Proceeds, Liquidation Proceeds, REO Proceeds and proceeds from the repurchase of the related Qualified Loan) which represent late recoveries of Installment Payments respecting which any such Central Servicer Advance was made; and (iv) to reimburse itself for any Nonrecoverable Advance and to pay to an Independent contractor any fee to be paid or reimbursed by Farmer Mac pursuant to the last sentence of Section 3.07(e). (b) The Central Servicer shall keep and maintain or cause to be kept and maintained separate accounting, on a Qualified Loan-by-Qualified Loan basis, for the purpose of providing Farmer Mac or its designee with the information necessary for the preparation of such reports as may be requested by Farmer Mac. Section 3.05. Maintenance of Hazard Insurance and Errors and Omissions and Fidelity Coverage. (a) The Central Servicer shall cause to be maintained for each Qualified Loan a Standard Hazard Insurance Policy insuring against loss or damage to the insurable improvements included in the Appraised Value in an amount not less than the value assigned to such improvements in the related appraisal. The Central Servicer shall also cause to be maintained on property acquired upon foreclosure, or deed in lieu of foreclosure, of any Qualified Loan, a Standard Hazard Insurance Policy in an amount at least equal to the amount necessary to avoid the application of any co-insurance clause contained in the related hazard insurance policy. Pursuant to Section 3.02, any amounts collected by the Central Servicer under any such policies (other than amounts to be applied to the restoration or repair of the related Mortgaged Property or property thus acquired or amounts released to the Borrower in accordance with the Central Servicer's normal servicing procedures) shall be deposited in the Collection Account, subject to withdrawal pursuant to Section 3.04. Any cost incurred by the Central Servicer in maintaining any such insurance shall not, for the purpose of calculating amounts required to be deposited in the Collection Account, be added to the amount owing under the Qualified Loan, notwithstanding that the terms of the Qualified Loan so permit. Such costs shall be reimbursable to the Central Servicer in accordance with Section 3.04(a)(iii) as if such costs were contained in a Central Servicer Advance. It is understood and agreed that no earthquake or other additional insurance is to be required of any Borrower or maintained on property acquired in respect of a Qualified Loan other than pursuant to such laws and regulations applicable to such Borrower as shall at any time be in force and as shall require such additional insurance. If the Central Servicer shall maintain a blanket policy issued by an insurer having a Moody's financial strength rating of A3 or higher and insuring against hazard losses on all of the Qualified Loans, it shall conclusively be deemed to have satisfied its obligation as set forth in this Section 3.05(a). Such policy may contain a deductible clause, in which case, if there shall not have been maintained on the related Mortgaged Property or acquired property an insurance policy complying with the first sentence of the first paragraph of this Section 3.05(a), and there shall have been a loss that would have been covered by such a policy had it been maintained, the Central Servicer shall be required to deposit from its own funds into the Collection Account the amount not otherwise payable under the blanket policy because of such deductible clause. (b) The Central Servicer shall obtain and maintain at its own (non-reimbursable) expense and keep in full force and effect throughout the term of this Agreement a blanket fidelity bond and an errors and omissions insurance policy (which errors and omissions insurance policy shall provide coverage in accordance with the Securities Guide) covering the Central Servicer's officers and employees and other persons acting on behalf of the Central Servicer in connection with its activities under this Agreement, except that such policies need not specifically insure against the acts of Field Servicers, except to the extent the Field Servicer is receiving payments on Qualified Loans, or executing documents under a power of attorney granted by the Central Servicer. In the event that any such required bond or policy ceases to be in effect, the Central Servicer shall obtain a comparable replacement bond or policy from an issuer or insurer, as the case may be, providing such coverage as shall satisfy the requirements set forth in the Securities Guide. Coverage of the Central Servicer under a policy or bond obtained by an Affiliate of the Central Servicer and providing the coverage required by this Section 3.05(b) shall satisfy the requirements of this Section 3.05(b). Section 3.06. Enforcement of Due-on-Sale Clauses; Assumption Agreements. (a) When any Mortgaged Property is conveyed by the Borrower, the Central Servicer may, but shall not be required to, enforce any due-on-sale or due-on-encumbrance clause contained in any Mortgage Note or Mortgage, in accordance with the provisions of such Mortgage Note or Mortgage and in the best interests of Farmer Mac, and may approve the assumption of the Mortgage Note by the transferee of the Mortgaged Property; provided, however, that after giving due effect to any such additional encumbrance, the loan-to-value ratio of the related Qualified Loan is not in excess of the Loan-to-Value Ratio thereof as of the Cut-Off Date. (b) In any case in which a Mortgaged Property is to be conveyed to a Person by a Borrower, and such Person is to enter into an assumption agreement or substitution agreement or supplement to the Mortgage Note or Mortgage which requires the signature of Farmer Mac, or if an instrument of release to be signed by Farmer Mac is required releasing the Borrower from liability on the Qualified Loan, the Central Servicer shall deliver or cause to be delivered to Farmer Mac (or its designee) for signature the assumption agreement with the Person to whom the Mortgaged Property is to be conveyed and such substitution agreement or supplement to the Mortgage Note or Mortgage or other instruments as are reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage or otherwise to comply with any applicable laws regarding assumptions or the transfer of the Mortgaged Property to such Person. The Central Servicer shall also deliver or cause to be delivered to Farmer Mac with the foregoing documents a letter explaining the nature of such documents and the reason or reasons why Farmer Mac's signature is required. With such letter, the Central Servicer shall deliver to Farmer Mac a certificate of a Servicing Officer in form reasonably satisfactory to Farmer Mac certifying that: (i) a Servicing Officer has examined and approved such documents as to form and substance, (ii) Farmer Mac's execution and delivery thereof will not conflict with or violate any terms of this Agreement; (iii) subsequent to the closing of the transaction involving the assumption or transfer (A) the Qualified Loan will continue to be secured by a first mortgage lien pursuant to the terms of the Mortgage and (B) no material term (including, but not limited to, the Mortgage Rate, the amount of any Installment Payment and any term affecting the amount or timing of payment) of the Qualified Loan will be altered and the term of the Qualified Loan will not be increased and (iv) if the seller/transferor of the Mortgaged Property is to be released from liability on the Qualified Loan, the Central Servicer has evaluated the creditworthiness of the buyer/transferee and has determined that if the buyer/transferee were applying for the Qualified Loan being assumed, such loan would be a Qualified Loan, and such release will not adversely affect the collectibility of the Qualified Loan (based on the Central Servicer's good faith determination). Upon receipt of and in reliance upon such certificate, Farmer Mac (or its designee) shall execute any necessary instruments for such assumption or substitution of liability. Upon the closing of the transactions contemplated by such documents, the Central Servicer shall cause the originals of the assumption agreement, the release (if any), or the modification or supplement to the Mortgage Note or Mortgage to be delivered to Farmer Mac. (c) The Central Servicer shall be entitled to approve a request from a Borrower for the granting of an easement on the related Mortgaged Property in favor of another Person, any alteration or demolition of the related Mortgaged Property or other similar matters if (A) it has determined, exercising its good faith business judgment in the same manner as it would if it were the owner of the related Qualified Loan, that (i) the security for such Qualified Loan would not be materially adversely affected thereby; (ii) the timely and full collectibility of such Qualified Loan would not be adversely affected thereby; and (iii) as a result of such easement, alteration, demolition orother similar matter, the loan-to-value ratio would not be in excess of the Loan-to-Value Ratio with respect to such Qualified Loan as of the Cut-Off Date; and (B) it follows the requirements and procedures therefor as set forth in the Securities Guide, if applicable. Section 3.07. Realization Upon Defaulted Qualified Loans. (a) (i) Notwithstanding anything to the contrary in this Agreement, the Central Servicer shall not, on behalf of Farmer Mac, obtain title to a Mortgaged Property as a result of foreclosure or otherwise, and shall not otherwise acquire possession of, or take any other action with respect to, any Mortgaged Property, if, as a result of any such action, Farmer Mac would be considered to hold title to, to be a "mortgagee-in- possession" of, or to be an "owner" or "operator" of, such Mortgaged Property within the meaning of any Environmental Statute or a "discharger" or "responsible party" thereunder, unless the Central Servicer has prepared or caused to be prepared an Environmental Review Report and obtained any consents in connection therewith as shall be required by the Securities Guide. The Central Servicer shall foreclose upon or otherwise comparably convert the ownership of Mortgaged Properties securing such of the Qualified Loans as come into and continue in default and as to which no arrangements consistent with this Agreement and the Securities Guide have been made for collection of delinquent payments pursuant to Section 3.02. In connection with such foreclosure or other conversion, and in connection with any restoration of any Mortgaged Property after foreclosure or conversion and before disposal thereof, the Central Servicer shall follow such practices and procedures as it shall deem, in its best judgment, necessary or advisable in accordance with applicable law and as shall be required or permitted by this Agreement and the Securities Guide. The foregoing is subject to the proviso that the Central Servicer shall not be authorized to incur expenses in connection with any foreclosure or conversion, or towards the restoration of any property, unless it shall determine in good faith that such conversion, foreclosure and/or restoration will increase the proceeds of liquidation of the Qualified Loan to Farmer Mac after reimbursement for the expenses therefor. In the event that the Central Servicer makes such a determination, it shall advance any Liquidation Expenses from its own funds. Any Liquidation Expenses incurred by the Central Servicer in accordance with the foregoing shall be reimbursable to the Central Servicer, out of REO Proceeds or Liquidation Proceeds relating to such Qualified Loan in accordance with Section 3.04(a)(iii) as if such costs were contained in a Central Servicer Advance. The Central Servicer shall be entitled to receive interest on such Liquidation Expenses to the extent such interest is collected under the terms of the related Mortgage Note; provided, however, that, the Central Servicer shall only be entitled to such interest after an aggregate amount equal to the sum of (i) the outstanding principal balance of the related Qualified Loan; (ii) interest accrued and unpaid on such Qualified Loan at the applicable Net Mortgage Rate; and (iii) any applicable Yield Maintenance Amount has been deposited in the Remittance Account with respect to such Qualified Loan. (ii) If the Environmental Review Report discloses any adverse information with respect to any Mortgaged Property or if any questions required to be answered in the Environmental Review Report cannot be answered, the Central Servicer shall either (x) recommend to Farmer Mac in writing that foreclosure, trustee's sale or a deed-in-lieu of foreclosure should be delayed or abandoned, stating the reasons for the Central Servicer's conclusions and attaching a copy of Part I of the Environmental Review Report or (y) conduct Phase II of an Environmental Review (as such terms are defined in the Securities Guide). (iii) If the Environmental Review Report or Phase II of the Environmental Review discloses the presence, disposal, escape, seepage, leakage, spillage, discharge, emission, release or threatened release of any Hazardous Materials on, from or affecting the Mortgaged Property and if the cost of eliminating such Hazardous Materials exceeds the potential recovery upon liquidation of the related Qualified Loan the Central Servicer shall not allow such Qualified Loan to become an REO Qualified Loan and shall take such action as it deems to be in the best interest of Farmer Mac, including, if the Central Servicer deems it so appropriate, and after making reasonable efforts to locate a purchaser, the release of all or a portion of the lien of the related Mortgage. (b) In the event that title to any Mortgaged Property is acquired for the benefit of Farmer Mac (or Farmer Mac's assignee or designee) in foreclosure, by delivery of a deed-in-lieu of foreclosure or otherwise, the named grantee of the deed or certificate of sale shall be "First Trust National Association, as Custodian/Trustee" or such successor custodian/trustee as identified by Farmer Mac. The Central Servicer, on behalf of Farmer Mac, shall use its best efforts to dispose of any REO Property in a reasonably expeditious manner and otherwise in accordance with any applicable Environmental Statute. (c) The Central Servicer shall separately account for all funds collected and received in connection with the operation of any REO Property in the REO Account. The aggregate of the amounts deposited in the REO Account during a Collection Period in respect of an REO Property pursuant to this Section shall be allocated first to all amounts payable to the Central Servicer with respect to such REO Property or the related Qualified Loan pursuant to this Section and remaining unpaid, second to all interest accrued and unpaid thereon from the last date to which interest was paid by the Borrower (or deemed to have been paid through previous applications to interest pursuant to this clause second) and third to any REO Principal Amortization Amount. Interest and earnings on funds deposited in the REO Account shall accrue to the benefit of Farmer Mac. (d) The Central Servicer shall have full power and authority, subject only to the specific requirements and prohibitions of this Agreement, to do any and all things in connection with any REO Property as are consistent with the manner in which the Central Servicer manages and operates similar property owned by the Central Servicer or any of its Affiliates, all on such terms and for such period as the Central Servicer deems to be in the best interests of Farmer Mac. In connection therewith, the Central Servicer shall deposit, or cause to be deposited, on a daily basis in the REO Account all revenues received by it with respect to the related REO Property and shall withdraw therefrom funds necessary for the proper operation, management and maintenance of the related REO Property including: (i) all insurance premiums due and payable in respect of any REO Property; (ii) all real estate taxes and assessments in respect of any REO Property that may result in the imposition of a lien thereon; and (iii) all costs and expenses necessary to maintain and operate such REO Property. To the extent that amounts on deposit in the REO Account are insufficient for the purposes set forth in (i) through (iii) above with respect to any REO Property, the Central Servicer shall advance from its own funds such amount as is necessary for such purposes if, but only if, the Central Servicer would make such advances if the Central Servicer owned such REO Property and if, in the Central Servicer's good faith business judgment, the payment of such amounts will be recoverable from the operation or sale of that REO Property. (e) The Central Servicer on behalf of Farmer Mac may contract with any Independent contractor for the operation and management of any REO Property, provided that: (i) the terms and conditions of any such contract shall not be inconsistent with the terms of this Agreement; (ii) any such contract shall require, or shall be administered to require, that the Independent contractor pay all costs and expenses incurred in connection with the operation and management of such REO Property, including those listed above, and remit all related revenues (net of such costs and expenses) to the Central Servicer as soon as practicable, but in no event later than thirty days following the receipt thereof by such Independent contractor; (iii) none of the provisions of this Section 3.07(e) relating to any such contract or to actions taken through any such Independent contractor shall be deemed to relieve the Central Servicer of any of its duties and obligations to Farmer Mac with respect to the operation and management of any such REO Property; and (iv) the Central Servicer shall be obligated with respect thereto to the same extent as if it alone were performing all duties and obligations in connection with the operation and management of such REO Property. The Central Servicer shall be entitled to enter into any agreement with any Independent contractor performing services for it related to its duties and obligations hereunder for indemnification of the Central Servicer by such Independent contractor, and nothing in this Agreement shall be deemed to limit or modify such indemnification. The Central Servicer (provided it act as an independent contractor with respect to properties held by other entities) or any Independent contractor shall be entitled to a fee, based on the prevailing market rate (determined after consultation with Farmer Mac), for the operation and management of any REO Property. If such fee is not covered by gross revenues from the related REO Property, the Central Servicer or other Independent contractor shall be paid by Farmer Mac for all fees owed it. (f) On or before each Remittance Date, the Central Servicer shall withdraw from the REO Account and deposit into the Collection Account Net REO Proceeds received or collected during the related Collection Period less amounts reasonably anticipated to be needed to pay recurring expenses relating to REO Properties in the next twelve months. (g) Notwithstanding anything in this Agreement to the contrary, the Central Servicer shall have the right but not the obligation to purchase any Qualified Loan from Farmer Mac at such time as such Qualified Loan comes into and continues in default for a period of at least 90 days. If the Central Servicer exercises its right so to purchase, the Central Servicer shall deposit the Purchase Price with respect to such defaulted Qualified Loan into the Collection Account not later than the Remittance Date next succeeding the Collection Period during which the Central Servicer notifies Farmer Mac of its intention to purchase such defaulted Qualified Loan. (i) If applicable state law permits an action for a deficiency judgment, the Central Servicer shall have the right to determine whether to seek a deficiency judgment or enforce any applicable additional security documents following foreclosure, exercising its good faith business judgment in the same manner as it would if it had been the owner of the related Qualified Loan. (j) The Central Servicer shall neither be required to take nor to omit to take any action in any case where such action or omission, in its good faith business judgment, would cause it to be liable under an Environmental Statute. If the Central Servicer determines that any action or omission would so subject it to such liability, it shall promptly notify Farmer Mac. Section 3.08. Farmer Mac to Cooperate; Release of Mortgage Files. (a) Upon receipt of the payment in full of any Qualified Loan, or upon the receipt by the Central Servicer of a notification that payment in full will be escrowed in a manner customary for such purposes, the Central Servicer shall immediately notify Farmer Mac (or its designee) by a certification of a Servicing Officer in form reasonably acceptable to Farmer Mac (which certification shall include a statement to the effect that all amounts received or to be received in connection with such payment required to be deposited in the Collection Account pursuant to Section 3.02 have been or will be so deposited) and shall request delivery to it of the Mortgage File. Upon receipt of such certification and request, Farmer Mac shall cause the related Mortgage File to be released to the Central Servicer and the request for reconveyance, deed of reconveyance or release or satisfaction of mortgage or such instrument releasing or reassigning the lien of the Mortgage prepared by the Central Servicer, together with the Mortgage Note with written evidence of cancellation thereon to be executed and delivered to the Central Servicer. Farmer Mac shall cause the Mortgage File to be released and such other documents or instruments in accordance with this Section 3.08 to be executed and delivered promptly (generally within 2 Business Days) after receipt by Farmer Mac of the foregoing request. No expenses incurred in connection with recording any instrument of satisfaction or deed of reconveyance shall be chargeable to the Collection Account. (b) From time to time as is appropriate for the servicing or foreclosure of any Qualified Loan, Farmer Mac shall cause the related Mortgage File or any document therein to be delivered to the Central Servicer upon Farmer Mac's receipt of a request for release (in form satisfactory to Farmer Mac) from the Central Servicer requesting delivery of such file or document. Farmer Mac shall cause such release promptly (generally within 2 Business Days after receipt by Farmer Mac of the foregoing request for release. The Central Servicer shall return each Mortgage File or any document therein so released to Farmer Mac when the need therefor by the Central Servicer no longer exists, unless (i) the Qualified Loan has been liquidated and the Liquidation Proceeds relating to the Qualified Loan have been deposited in the Collection Account or (ii) the Mortgage File or such document has been delivered to any attorney, or to a public trustee or other public official as required by law, for purposes of initiating or pursuing legal action or other proceedings for the foreclosure of the Mortgaged Property either judicially or nonjudicially, and the Central Servicer has delivered to Farmer Mac a certificate of a Servicing Officer certifying as to the name and address of the Person to which such Mortgage File or such document was delivered and the purpose or purposes of such delivery. In the event of the liquidation of a Qualified Loan, Farmer Mac shall cause the request for release with respect thereto to be delivered to the Central Servicer upon deposit of the related Liquidation Proceeds in the Collection Account and the Central Servicer's request for delivery of the request for release. (c) Farmer Mac shall cause the execution and delivery to the Central Servicer of any court pleadings, requests for trustee's sale or other documents prepared by the Central Servicer and necessary to the foreclosure or Farmer Mac's sale, bankruptcy sale or work out settlement in respect of a Mortgaged Property or to any legal action brought to obtain judgment against any Borrower on the Mortgage Note, Mortgage or Additional Collateral Documents or to obtain a deficiency judgment, or to enforce any other remedies or rights provided by the Mortgage Note, Mortgage or Additional Collateral Documents or otherwise available at law or in equity. Together with such documents or pleadings, the Central Servicer shall deliver to Farmer Mac a certificate of a Servicing Officer requesting that such pleadings or documents be caused to be executed by Farmer Mac and certifying as to the reason such documents or pleadings are required and that the execution and delivery thereof will not invalidate any insurance coverage under any required insurance policy or invalidate or otherwise affect the lien of the Mortgage, except for the termination of such a lien upon completion of the foreclosure or trustee's sale. Section 3.09. Servicing and Other Compensation. (a) The Central Servicer, as compensation for its activities and obligations hereunder, shall be entitled to withhold (i) from each payment on account of interest on a Qualified Loan (x) the amount of interest calculated at the Servicing Fee Rate to the extent, if any, that the interest component of the payment received is in excess of interest calculated at the Net Mortgage Rate and (y) the amount, if any, of each such payment representing interest accruing on any delinquent Installment Payment with respect to which a Central Servicer Advance has been made by and not reimbursed to the Central Servicer, (ii) from Net REO Proceeds, the amount, if any, by which the portion thereof allocable to interest is in excess of interest at the Net Mortgage Rate but not to exceed interest at the Servicing Fee Rate for the period deemed to be covered thereby, and (iii) from Net Liquidation Proceeds the amount, if any, by which such Net Liquidation Proceeds are in excess of the sum of (x) the unpaid principal balance of the related Qualified Loan together with accrued and unpaid interest thereon at the Net Mortgage Rate to the date of the final liquidation thereof and (y) any applicable Yield Maintenance Amount, but not in excess of interest calculated at the Servicing Fee Rate from the date of the last payment of fees to the Central Servicer with respect to each related Liquidated Qualified Loan. The Central Servicer shall also be entitled to additional servicing compensation in the form of assumption fees, late payment charges, interest calculated at a penalty rate (but only with respect to Installment Payments for which a Central Servicer Advance is outstanding) and other service charges imposed upon Borrowers in connection with servicing the Qualified Loans. (b) The Central Servicer shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement therefor except as specifically provided in this Agreement or the applicable Central Servicing Supplement. Section 3.10. Access to Certain Documentation Regarding the Qualified Loans. (a) Upon the prior written request of Farmer Mac received reasonably in advance, the Central Servicer shall provide reasonable access to representatives of Farmer Mac (including its assignee or designee) to documentation regarding the Qualified Loans during normal business hours at the offices of the Central Servicer designated by it. The Central Servicer shall permit such representatives to photocopy any such documentation and shall provide equipment for that purpose. The Central Servicer shall forward to Farmer Mac such reports as may be required by Farmer Mac with respect to delinquent Qualified Loans, which reports shall include information broken down by aging of delinquency, specifying the Qualified Loans included in each category. (b) The Central Servicer shall maintain or cause to be maintained adequate books and records pertaining to each Qualified Loan serviced hereunder including, but not limited to, copies of all Mortgage Servicing Documents and any additional documentation customarily contained in an agricultural loan servicing file. The Central Servicer agrees that such documents shall be maintained until the earlier of (a) seven years after the maturity of the Qualified Loan; and (b) the date such documentation is transferred to a successor servicer that shall have assumed the Central Servicer's responsibilities and obligations in accordance with this Agreement. Such documentation may be in the form of microfilm, microfiche, ledger cards, magnetic media or other "machine readable" records, or any combination thereof. Section 3.11. Annual Statement as to Compliance. The Central Servicer will deliver to Farmer Mac, on or before March 31 of each year, beginning with the first March 31 that occurs at least six months after the Cut-Off Date, an Officers' Certificate stating, as to each signer thereof, that (i) a review of the activities of the Central Servicer during the preceding calendar year and of its performance under this Agreement has been made under such officer's supervision; (ii) to the best of such officer's knowledge, based on such review, the Central Servicer has fulfilled all its obligations under this Agreement throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof; and (iii) with respect to each Mortgaged Property, except as identified in writing to Farmer Mac, all Hazard Insurance Premiums, assessments, taxes and other charges that may become liens having precedence over the related Mortgage have been paid current. Section 3.12. Submission of Independent Public Accountants' Reports. (a) Within 120 days after the close of each fiscal year of the Central Servicer, beginning with the fiscal year ending in 1996, the Central Servicer shall deliver to Farmer Mac a copy of the report of Independent accountants respecting the Central Servicer's, or the Central Servicer's parent corporation's, consolidated financial statements for the preceding fiscal year. (b) On or before September 1 of each year, beginning September 1, 1997, the Central Servicer shall cause a firm of Independent accountants (who may also render other services to the Central Servicer) to furnish an agreed upon procedures report to Farmer Mac indicating that such firm has performed the procedures set forth as Exhibit A hereto and detailing any findings. Notwithstanding the foregoing, the Central Servicer shall cause such reports to be delivered at such less frequent as Farmer Mac, in its sole discretion, consents to in writing. Section 3.13. Inspections of the Mortgaged Properties. The Central Servicer shall cause each Mortgaged Property to be physically inspected at least annually to determine that (a) the Mortgaged Property has not been abandoned and (b) the agricultural activities conducted thereon appear to be conducted in accordance with customary and reasonable farming practices. Such inspections shall be conducted (i) at no expense to Farmer Mac, (ii) by a Person knowledgeable regarding good farming practices for the agriculture being conducted on the Mortgaged Property and (iii) during the production season for the particular type of agricultural product being produced thereon. If either of the foregoing conditions set forth in clauses (a) and (b) above is not present with respect to any Mortgaged Property, the Central Servicer shall promptly notify Farmer Mac and shall take such action with respect thereto as may be permitted by the related Mortgage and as may be reasonably determined by the Central Servicer to be in the best interests of Farmer Mac. Section 3.14. Partial Releases. At the request of a Borrower, the Central Servicer may release a portion of any Mortgaged Property from the lien of the related Mortgage provided that: (i) the remaining portion of the Mortgaged Property is reappraised by an appraiser in accordance with the Appraisal Standards, (ii) the Borrower makes a prepayment in part (and pays any applicable Yield Maintenance Amount), if necessary, such that the loan-to-value ratio of the remaining principal amount of the related Qualified Loan outstanding after such partial prepayment to the reappraised value of the remaining portion of the Mortgaged Property is no greater than the maximum loan-to-value ratio provided for similar loans in the Securities Guide, (iii) the cash flow from the remaining portion of the Mortgaged Property is sufficient to service the remaining indebtedness under the related Mortgage Note, and (iv) the Central Servicer delivers to Farmer Mac prior to any such partial release a Servicing Officer's certificate certifying that such partial release meets the foregoing conditions of this Section 3.14 and, subsequent to such partial release, a copy of the executed partial release with appropriate recording information noted thereon. At the Borrower's request, the Central Servicer will reschedule the repayment of the remaining payments on the Qualified Loan to provide for the amortization of the remaining principal balance of the Qualified Loan, after taking into account the prepayment related to the partial release, over the remaining term of the Qualified Loan. Any prepayments (and any applicable Yield Maintenance Amounts) received by the Central Servicer pursuant to a partial release shall be deposited in the Collection Account and the prepayments shall be treated for all purposes of this Agreement as partial prepayments on the Qualified Loans. Section 3.15. Servicing Agreements between Central Servicer and Field Servicers. The Central Servicer may enter into Servicing Agreements with Field Servicers who satisfy the requirements set forth in the Securities Guide for a portion of the servicing of some or all of the Qualified Loans. References in this Agreement to actions taken or to be taken by the Central Servicer in servicing the Qualified Loans include actions taken or to be taken by a Field Servicer on behalf of the Central Servicer. Each Servicing Agreement will be upon such terms and conditions as are permitted by the Securities Guide and are not inconsistent with this Agreement and as the Central Servicer and the Field Servicer have agreed. The Central Servicer and the Field Servicer may enter into amendments thereto or different forms of Servicing Agreements and nothing herein shall be deemed to limit in any respect the discretion of the Central Servicer to modify or enter into different Servicing Agreements; provided, however, that any such amendments or different forms shall not violate the provisions of this Agreement or the Securities Guide. Section 3.16. Successor Field Servicers. The Central Servicer shall be entitled to terminate any Servicing Agreement in accordance with the terms and conditions of such Servicing Agreement and without any limitation by virtue of this Agreement; provided, however, that in the event of termination of any Servicing Agreement by the Central Servicer or the Field Servicer, the Central Servicer shall either act as Field Servicer of the related Qualified Loan or enter into a Servicing Agreement with a successor Field Servicer which will be bound by the terms of a Servicing Agreement entered into with such successor Field Servicer. The Central Servicer shall notify Farmer Mac of any termination of any Field Servicer. Section 3.17. Liability of the Central Servicer. Notwithstanding any Servicing Agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Central Servicer or a Field Servicer or reference to actions taken through a Field Servicer or otherwise, the Central Servicer shall remain obligated and liable to Farmer Mac for the servicing of the Qualified Loans in accordance with the provisions of Section 3.01 without diminution of such obligation or liability by virtue of such Servicing Agreements or arrangements or by virtue of indemnification from the Field Servicer and to the same extent and under the same terms and conditions as if the Central Servicer alone were servicing and administering the Qualified Loans. For purposes of the foregoing, amounts received by a Field Servicer in connection with a Qualified Loan or REO Property shall be deemed to have been received by the Central Servicer. The Central Servicer shall be entitled to enter into any agreement with a Field Servicer for indemnification of the Central Servicer and nothing contained in this Agreement shall be deemed to limit or modify such indemnification. Section 3.18. No Contractual Relationship Between Field Servicer and Farmer Mac . Any Servicing Agreement that may be entered into and any other transactions or services relating to the Qualified Loans involving a Field Servicer in its capacity as such shall be deemed to be between the Field Servicer and the Central Servicer alone. Farmer Mac shall not be deemed a party thereto and shall have no claims, rights, obligations, duties or liabilities with respect to the Central Servicer or any Field Servicer under such Servicing Agreements except as set forth in Section 3.19. Section 3.19. Assumption or Termination of Servicing Agreements by Farmer Mac. (a) In the event that the Central Servicer shall for any reason no longer be acting as such hereunder (including by reason of an Event of Default) and Farmer Mac or its designee shall have assumed the duties of the Central Servicer, Farmer Mac or such designee may, at Farmer Mac's sole discretion, thereupon assume all of the rights and obligations of the Central Servicer under each Servicing Agreement that may have been entered into. Each Servicing Agreement shall contain provisions allowing Farmer Mac to rescind such agreement without penalty in the event the Central Servicer shall no longer be acting as such. Farmer Mac, its designee or the successor servicer for Farmer Mac shall be deemed to have assumed all of the Central Servicer's interest therein and to have replaced the Central Servicer as a party to each Servicing Agreement to the same extent as if such agreement had been assigned to the assuming party, except that the Central Servicer shall not thereby be relieved of any liability or obligations under any Servicing Agreement which arose prior to the date each Servicing Agreement is deemed so assigned and assumed. (b) The Central Servicer shall, upon request of Farmer Mac but at the expense of the Central Servicer: (i) deliver to the assuming party all documents and records held by the Central Servicer relating to each Servicing Agreement and the Qualified Loans then being serviced and an accounting of amounts collected and held by it; (ii) prepare, execute and deliver all documents and instruments and take all actions reasonably requested by Farmer Mac or its designee to effect the succession by Farmer Mac or its designee hereunder and the transfer of each Servicing Agreement to the assuming party; and (iii) and otherwise use its best efforts to effect the orderly and efficient succession hereunder and transfer of each Servicing Agreement to the assuming party. ARTICLE IV PAYMENTS TO FARMER MAC AND REPORTS Section 4.01. Central Servicer's Report; Remittance Reconciliation Report; Loan Servicing Report. (a) Not later than the third Business Day of each calendar month, the Central Servicer shall deliver to Farmer Mac and Farmer Mac's designee, a Central Servicer's Report. Such Central Servicer's Report shall be in a machine-readable format in accordance with the tape specifications and other requirements set forth in Exhibit C hereto or in such other format or conform to such other specifications or requirements as Farmer Mac and the Central Servicer may agree. (b) In addition to the information required under Section 4.01(a), the Central Servicer's Report shall contain such information as is reasonably requested by Farmer Mac, including, but not limited to the information described below. (i) a listing of all previously unadvanced Installment Payments (with the interest components thereof adjusted to interest at the related Net Mortgage Rates) on the Qualified Loans due on or prior to the preceding Due Date that were delinquent on the preceding Remittance Date; (ii) Central Servicer Advances made on the preceding Remittance Date; (iii) the compensation retained by the Central Servicer with respect to the previous Collection Period, itemized by category (e.g., type of fees); (iv) the amount of reimbursement for Central Servicer Advances withdrawn from the Collection Account during the preceding Collection Period; (v) an itemization of unreimbursed Central Servicer Advances (exclusive of Nonrecoverable Advances) as of the preceding Due Date; (vi) an itemization of any Central Servicer Advances which became Nonrecoverable Advances during the previous Collection Period; (vii) a reconciliation of each custodial account (e.g., any Collection Accounts and REO Accounts) for the second preceding Collection Period; (viii) a reconciliation of Scheduled Balances to actual balances of the Qualified Loans; and (xi) such other information as Farmer Mac may from time to time request. (c) On or before the tenth day of each calendar month (or if such tenth day is not a Business Day, the next succeeding Business Day), the Central Servicer will provide to Farmer Mac and its designee a Loan Servicing Report substantially in the form of Exhibit D hereto, which Loan Servicing Report will provide information (including proposed remedial action to be taken by the Central Servicer) with respect to: Qualified Loans which have been identified by Farmer Mac as "watch-listed" loans; delinquent Qualified Loans; Qualified Loans in foreclosure; REO Qualified Loans; and bankruptcy proceedings involving Borrowers. (d) On a timely basis each month, the Central Servicer shall prepare, and make available to Farmer Mac or its designee upon request, a remittance reconciliation report. Section 4.02. Remittance Account. (a) On or before the Closing Date, Farmer Mac shall establish the Remittance Account and provide the Central Servicer with information concerning its location. The Central Servicer, on or before 10:00 A.M. Central Servicer's local time on each Remittance Date, shall deposit in same day funds an amount equal to the Qualified Loan Receipts for the preceding Collection Period. Section 4.03. Reports of Foreclosures and Abandonment of Mortgaged Property. (a) Each year, beginning in 1997, the Central Servicer shall make the reports of foreclosures and abandonments of any Mortgaged Property required by Section 6050J of the Internal Revenue Code and provide copies of such reports to Farmer Mac. In order to facilitate this reporting process, the Central Servicer, on or before the date required by law, shall provide to the Internal Revenue Service and Farmer Mac reports relating to each instance occurring during the previous calendar year in which the Central Servicer (i) on behalf of Farmer Mac acquires an interest in a Mortgaged Property through foreclosure or other comparable conversion in full or partial satisfaction of a Qualified Loan, or (ii) knows or has reason to believe that a Mortgaged Property has been abandoned. The reports from the Central Servicer shall be in form and substance sufficient to meet the reporting requirements imposed by such Section 6050J. (b) Within 30 days after disposition of any REO Property, the Central Servicer shall provide to Farmer Mac a statement of accounting for the related Mortgaged Property and REO Account, including without limitation (i) each category of deposit to, withdrawal from and investment earnings within such REO Account, (ii) the loan number of the related Qualified Loan, (iii) the date such Qualified Loan became a REO Qualified Loan by foreclosure, or by deed in lieu of foreclosure or otherwise, (iv) the date of such disposition, (v) the gross sales price and the related selling and other expenses, (vi) accrued interest, calculated from the date of acquisition to the disposition date, and (vii) such other information as Farmer Mac may reasonably request. ARTICLE V DEFAULT Section 5.01. Events of Default. Event of Default, wherever used herein, means one of the following events: (i) the Central Servicer shall fail to make any deposit (A) to the Remittance Account required by Section 4.02 or (B) to the Collection Account required by Section 3.02(a) and such failure shall continue unremedied for a period of one Business Day after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to the Central Servicer by Farmer Mac (or Farmer Mac's designee); or (ii) the Central Servicer shall fail to observe or perform in any material respect any other of the covenants or agreements on the part of the Central Servicer contained in this Agreement and such failure shall continue unremedied for a period of 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Central Servicer by Farmer Mac; or (iii) a decree or order of a court or agency or supervisory authority having jurisdiction in the premises in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or appointing a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Central Servicer and such decree or order shall have remained in force undischarged or unstayed for a period of 90 days; or (iv) the Central Servicer shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings of, or relating to, the Central Servicer or of, or relating to, all or substantially all of the property of the Central Servicer; or (v) the Central Servicer shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of, or commence a voluntary case under, any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations; or (vi) the Central Servicer shall fail at any time to meet Farmer Mac's standards for eligible agricultural real estate mortgage central servicers so that, in Farmer Mac's sole discretion, the Central Servicer's ability to comply with this Agreement, any Central Servicing Supplement or the Securities Guide within a reasonable period of time is adversely affected; or (vii) a court of competent jurisdiction shall have found that the Central Servicer or any of its principal officers has committed an act of civil fraud or the Central Servicer or any of its principal officers shall have been convicted of any criminal act related to the Central Servicer's lending or mortgage selling or servicing activities or that, in Farmer Mac's sole discretion, adversely affects the Central Servicer's reputation or Farmer Mac's reputation or interests. If an Event of Default shall occur, then, and in each and every case, so long as such Event of Default shall not have been remedied, Farmer Mac may, by notice in writing to the Central Servicer, terminate all of the rights and obligations of the Central Servicer under this Agreement and in and to the Qualified Loans and the proceeds thereof; provided, that any liability of the Central Servicer under this Agreement arising prior to such termination shall survive such termination. On or after the receipt by the Central Servicer of such written notice, all authority and power of the Central Servicer under this Agreement shall pass to and be vested in Farmer Mac; and, without limitation, Farmer Mac is hereby authorized and empowered to execute and deliver, on behalf of the Central Servicer, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Qualified Loans and related documents, or otherwise. If an Event of Default shall occur and be continuing, the Central Servicer agrees to cooperate with Farmer Mac in effecting the termination of the Central Servicer's responsibilities and rights hereunder, including, without limitation, the transfer to Farmer Mac (or its designee) for administration by it of all cash amounts which shall at the time be on deposit in the Collection Account or the REO Account or thereafter be received with respect to the Qualified Loans, the delivery to Farmer Mac (or its designee) of all documents and records requested by it to enable it to assume the Central Servicer's obligations hereunder and the reconciliation of all of the Qualified Loans, the Collection Account and the REO Account, all at the cost of the Central Servicer. Farmer Mac or its designee shall pay over to the Central Servicer that portion of any future proceeds of the Qualified Loans, which, if the Central Servicer were at the time acting hereunder, it would be permitted to receive in consideration of, or in reimbursement for, previous services performed, or advances made, by it, net of any amounts owing from the Central Servicer to Farmer Mac. ARTICLE VI MISCELLANEOUS Section 6.01 Central Servicing Supplements. A Central Servicing Supplement identifying the Qualified Loans to be assigned to the Central Servicer for servicing on each Closing Date and establishing the terms of such servicing shall be substantially in the form annexed hereto as Exhibit B (with such changes thereto as Farmer Mac and the Central Servicer shall agree to), shall have attached thereto a Schedule of Qualified Loans dated as of the date thereof and shall be executed by Farmer Mac and the Central Servicer as of the related Closing Date. Each Central Servicing Supplement shall identify and relate only to the particular Qualified Loans identified in the attached Schedule of Qualified Loans. Such Schedule of Qualified Loans shall list all Qualified Loans assigned to the Central Servicer for servicing on and after the related Closing Date and shall show as to each Qualified Loan the information provided for in Attachment 1 to Exhibit B hereto. The Central Servicing Supplement together with this Master Central Servicing Agreement shall constitute the Central Servicing Agreement with respect to the related Qualified Loans. Section 6.02 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of Farmer Mac, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive or any rights, remedies, powers or privileges provided by law. Section 6.03 Counterparts. This Agreement may be executed in any number of separate counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Section 6.04 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, FEDERAL LAW. TO THE EXTENT FEDERAL LAW INCORPORATES STATE LAW, THAT STATE LAW SHALL BE THE LAWS OF THE STATE OF NEW YORK. Section 6.05 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) two business days after it is mailed, certified or registered, return receipt requested, with postage prepaid, (c) when sent by telex, telegram or telecopy (with receipt confirmed) or (d) one business day after it is sent by Express Mail, FedEx or other express delivery service, as follows: (a) if to the Central Servicer, to it at: [Central Servicer] [Address] Attention: Telecopy Number: (b) if to Farmer Mac, to it at: Federal Agricultural Mortgage Corporation 919 Eighteenth St., N.W. Suite 200 Washington, DC 20006 Attention: Vice President - Mortgage-Backed Securities Telecopy Number: 202-872-7713 or to such other persons, addresses and telecopier numbers as a party shall specify as to itself by notice in writing to the other party. Section 6.06 Survival and Termination of Agreement. All covenants, agreements, representations and warranties made herein and in any certificate, document or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement until the later of the receipt by Farmer Mac or its assignee of payment in full in respect of all Qualified Loans and the satisfaction of all of the Mortgages. Section 6.07 Entire Agreement. This Agreement (which, for this purpose, includes the Central Servicing Supplement) sets forth the entire agreement of the parties hereto with respect to its subject matter, and supersedes all previous understandings, written or oral, with respect thereto. Section 6.08 Waiver of Jury Trial. The Central Servicer and Farmer Mac hereby irrevocably and unconditionally waive trial by jury in any legal action or preceding relating to this Agreement or the Central Servicing Supplement. Section 6.09 Severability. Any provision of this Agreement or the Central Servicing Supplement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or thereof or affecting the validity, enforceability or legality of any such provision in any other jurisdiction. Section 6.10 Assignability. Except as herein contemplated, neither this Agreement nor the Central Servicing Supplement shall be assigned by either of the parties hereto without the prior written consent of the other party; provided, however, that Farmer Mac may assign this Agreement to any affiliate of Farmer Mac or the holder of the Qualified Loans without prior notice or consent of the Central Servicer. Section 6.11 Third Party Beneficiaries. Any assignee or designee of Farmer Mac, including an assignee holding the Qualified Loans for the benefit of holders of securities guaranteed by Farmer Mac, is a third party beneficiary to this Agreement and the Central Servicing Supplement entitled to enforce any representations and warranties, indemnities and obligations of the parties. Except as otherwise provided, the parties to this Agreement hereby manifest their intent that no third party other than such assignee or designee, including an assignee for the benefit of such holders of securities, shall be deemed a third party beneficiary of this Agreement or the Central Servicing Supplement, and specifically that the Borrowers are not third party beneficiaries of this Agreement or the Central Servicing Supplement. IN WITNESS WHEREOF, Farmer Mac and the Central Servicer have caused their names to be signed hereto by their respective officers, duly authorized and their respective corporate seals, duly attested, to be hereunto affixed, all as of the 1st day of June, 1996. FEDERAL AGRICULTURAL MORTGAGE CORPORATION By: __________________________________________ Name: Henry D. Edelman Title: President and Chief Executive Officer [CENTRAL SERVICER] By: _________________________________________ Name: Title: EX-3 4 EXHIBIT 4.2 PROPOSED FORM OF LOAN SALE AGREEMENT MASTER LOAN SALE AGREEMENT between [SELLER] and FEDERAL AGRICULTURAL MORTGAGE CORPORATION dated as of [Date] TABLE OF CONTENTS SECTION 1. DEFINITIONS 1 1.1 Defined Terms 1 1.2 Other Definitional Provisions 5 SECTION 2. SALE AND PURCHASE OF LOANS 7 2.1 Agreement to Sell and Purchase 7 2.2 Conveyance of Qualified Loans 7 2.3 Conveyance of Mortgage Servicing Documents 9 2.4 Delivery of Payment; Place of Closing 10 SECTION 3. CONDITIONS PRECEDENT 10 3.1 Conditions Precedent to Obligations of Parties 10 3.2 Conditions Precedent to Obligations of Seller 10 3.3 Conditions Precedent to Obligations of Farmer Mac 11 SECTION 4. REPRESENTATIONS AND WARRANTIES 11 4.1 Representations and Warranties of Farmer Mac 11 4.2 Representations and Warranties of the Seller 12 4.3 Replacement of Defective Loans 18 4.4 Absolute and Unconditional Obligations 18 SECTION 5. COVENANTS 19 5.1 Affirmative Covenants of the Seller 19 SECTION 6. INDEMNIFICATION 20 6.1 General 20 6.2 Breaches of Representations and Warranties 20 SECTION 7. MISCELLANEOUS 21 7.1 Loan Sale Supplements 21 7.2 No Waiver; Cumulative Remedies 21 7.3 Counterparts 21 7.4 Governing Laws 21 7.5 Notices 21 7.6 Survival and Termination of Agreement 22 7.7 Entire Agreement 22 7.8 Waiver of Jury Trial 22 7.9 Severability 22 7.10 Assignability 22 7.11 Third Party Beneficiaries 22 (i) EXHIBITS LOAN SALE SUPPLEMENT Exhibit A SECRETARY'S CERTIFICATE OF FARMER MAC Exhibit B SECRETARY'S CERTIFICATE OF SELLER Exhibit C FORM OF OPINION OF COUNSEL TO WESTERN FARM CREDIT BANK Exhibit D (ii) MASTER LOAN SALE AGREEMENT MASTER LOAN SALE AGREEMENT, dated as of June 1, 1996 (this "Agreement"), between [Seller] (the "Seller") and the Federal Agricultural Mortgage Corporation, a federally chartered institution of the Farm Credit System ("Farmer Mac"). W I T N E S S E T H: WHEREAS, the Seller owns or will own certain agricultural real estate mortgage loans (the "Qualified Loans") to be identified on the Schedule of Qualified Loans (as hereinafter defined) attached to each Loan Sale Supplement. WHEREAS, the Seller desires to sell and Farmer Mac desires to purchase the Qualified Loans upon the terms and subject to the conditions set forth herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties to this Agreement hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the terms defined in the caption or in the recitals hereto shall have the meanings set forth therein, and the following terms shall have the following meanings: "Act": Title VIII of the Farm Credit Act of 1971, as amended. "Additional Collateral Documents": As to any Qualified Loan, any security documents (including any UCC-1, UCC-2 or UCC-3 Financing Statement) other than those listed in clauses (i) through (v) of Section 2.2(b), that are delivered to Farmer Mac or its designee and evidence rights or interests in the related Mortgaged Property. "Agricultural Real Estate": As defined in the Act and the Securities Guide. "Appraisal Standards": The appraisal standards established by Farmer Mac and set forth in the Securities Guide. "Appraised Value": The appraised value of a Mortgaged Property, which is the appraised value based upon the appraisal conducted in accordance with the Appraisal Standards less than six months prior to the Seller's approval for purchase or the Seller's origination of the Qualified Loan, which approval or origination shall have occurred not more than six months prior to the Cut-Off Date. "Assignment": An assignment of a Mortgage, notice of transfer or equivalent instrument, in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect of record the sale of the Mortgage to Farmer Mac or its designee. "Borrower": The obligor under a Qualified Loan. "Business Day": Any other day than (i) a Saturday or a Sunday, (ii) a day on which banking institutions in the States of Minnesota, New York or [Seller's jurisdiction] are required or authorized by law to be closed, (iii) a day on which the wire transfer system of the Federal Reserve Bank of New York is closed or (iv) a day on which Farmer Mac is closed. "Closing Date": As defined in the Loan Sale Supplement. "Collection Period": As defined in the Loan Sale Supplement. "Contractual Obligations": As to any Person, any provision of any security issued by such person or of any agreement, instrument or undertaking to which such person is a party or by which it or any of the property owned by it is bound. "Custodian": First Trust National Association or its successor in interest, including any corporation, association or bank that purchases substantially all of the corporate trust business of the Custodian, or its permitted successor as custodian for Farmer Mac or its designee. "Cut-Off Date": As defined in the Loan Sale Supplement. "Cut-Off Date Principal Balance": As to any Qualified Loan other than an Eligible Substitute Qualified Loan, the unpaid principal balance thereof at the Cut-Off Date after giving effect to all installments of principal due on or prior thereto, whether or not received. As to any Eligible Substitute Qualified Loan, the unpaid principal balance thereof as of the beginning of the Collection Period during which such Eligible Substitute Qualified Loan was assigned to Farmer Mac or its designee. "Defective Qualified Loan": A Qualified Loan as to which a representation or warranty made by the Seller under Section 4.2 has been breached and that consequently is required to be replaced with an Eligible Substitute Qualified Loan by such Seller or repurchased by such Seller pursuant to Section 2.2 (g) or 4.3. "Due Date": As to any Qualified Loan, any date upon which a scheduled installment of principal and interest on such Qualified Loan is due in accordance with the terms of the related Mortgage Note. "Eligible Substitute Qualified Loan": A Qualified Loan that is substituted for a Defective Qualified Loan pursuant to Section 2.2 (g) or 4.3 and that has characteristics that are acceptable to Farmer Mac, in its sole discretion. "Environmental Statute": Any Federal, state or local law, ordinance, rule or regulation including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended; the Hazardous Materials Transportation Act, as amended; the Resource Conservation and Recovery Act, as amended; and any regulations adopted and publications promulgated pursuant to each of the foregoing. "Farmer Mac": The Federal Agricultural Mortgage Corporation, a federally chartered institution of the Farm Credit System and instrumentality of the United States, or any successor corporation or entity. The term Farmer Mac, when used to refer to the entity purchasing or holding the Qualified Loans, shall also include any entity designated by Farmer Mac to be the holder of the Qualified Loans. "Governmental Authority": Any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Hazardous Materials": Any flammable explosives, radioactive materials or any other materials, wastes or substances defined as hazardous materials, hazardous wastes or hazardous or toxic substances by any Environmental Statute or by any Federal, state or local governmental authority having or claiming jurisdiction over the Mortgaged Property. "Installment Payment": As to any Qualified Loan and any Due Date, any payment of principal and/or interest thereon in accordance with the amortization schedule of such Qualified Loan (after adjustment for any curtailments occurring prior to the Due Date but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period). "Loan Sale Supplement": An instrument substantially in the form of Exhibit A hereto executed by Farmer Mac and the Seller pursuant to Section 2.2 hereof which supplements this Master Loan Sale Agreement and identifies the Qualified Loans being sold to Farmer Mac by the Seller on the Closing Date identified therein and sets forth the terms of the sale. "Loan-to-Value Ratio": As of any date, the fraction, expressed as a percentage, the numerator of which is the principal balance of the related Qualified Loan at the date of determination and the denominator of which is the Appraised Value of the related Mortgaged Property as of the date of the appraisal performed in accordance with the Appraisal Standards. "Mortgage": A mortgage, deed of trust or other instrument that constitutes a first lien on an interest in real property securing a Mortgage Note. "Mortgage File": The mortgage documents listed in subsection 2.2(b) pertaining to the particular Qualified Loan. "Mortgage Note": The originally executed note or other evidence of indebtedness evidencing the indebtedness of a Borrower under a Qualified Loan. "Mortgage Rate": As to any Qualified Loan, the rate of interest borne by the related Mortgage Note. "Mortgaged Property": The property securing a Qualified Loan. "Mortgage Servicing Documents": The custodial documents, servicing documents, escrow documents, if any, the original appraisal, including any updates thereto, which was the basis for the Appraised Value, and all other documents, records, and tapes necessary for prudent servicing in accordance with the Seller's standards for mortgage loan servicing, and such other papers and documents, tax receipts, insurance policies, insurance premium receipts, water stock certificates, ledger sheets, payment records, insurance claim files and correspondence, foreclosure files and correspondence, current and historical computerized data files and other papers and records of whatever kind or description, whether developed or originated by the Seller. "Officers' Certificate": As to any Person, a certificate signed by the Chairman of the Board, the Vice Chairman of the Board, the President, any Executive Vice President, Senior Vice President, Vice President or Second Vice President, and any of the Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant Secretaries of such Person delivered pursuant to this Agreement. "Opinion of Counsel": A written opinion of counsel acceptable to Farmer Mac. "Person": An individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or any other entity of whatever nature. "Qualified Loans": As defined in the recitals. "Purchase Price": As specified in the Loan Sale Supplement. "Repurchase Price": With respect to any Qualified Loan required to be purchased on any date pursuant to Section 4.2, an amount equal to the sum of (i) 100% of the unpaid principal balance thereof as shown on the Schedule of Qualified Loans less any principal payments made in respect of such Qualified Loan and (ii) the unpaid accrued interest at the Net Mortgage Rate on the unpaid principal balance thereof from the Due Date to which interest was last paid by the Borrower to the next Due Date for such Qualified Loan; and (iii) if the date of repurchase by the Seller occurs after the Qualified Loan has been securitized, any Yield Maintenance Amount that would be payable under the terms of the related Mortgage Note as if a Principal Prepayment in Full were made on the date of repurchase by the Seller and such Yield Maintenance Amount were calculated based on interest accruing at the Net Mortgage Rate less the sum of (x) the Guarantee Fee Rate and (y) the Trustee Fee Rate (each of the Guarantee Fee Rate and the Trustee Fee Rate having the meaning given such term in the applicable securitization documents). "Schedule of Qualified Loans": The list of Qualified Loans transferred to Farmer Mac or its designee on the Closing Date and attached to and made part of the Loan Sale Supplement in the form and containing the information set forth in Attachment I thereto, which list may be amended pursuant to Section 4.3 upon conveyance of an Eligible Substitute Qualified Loan. Such schedule, which shall be in hard copy and in machine readable format to Farmer Mac and the Custodian, may consist of multiple reports that collectively set forth all of the information requested. "Scheduled Principal Balance": As to any Qualified Loan and any Due Date, the principal balance of such Qualified Loan as of such Due Date, as specified in the amortization schedule at the time relating thereto (after adjustments for curtailments occurring prior to such Due Date but before any adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period) after giving effect to the payment of principal due prior to such Due Date, whether or not received from the related Borrower. "Securities Guide": The publication entitled "Federal Agricultural Mortgage Corporation Securities Guide," release dated April 10, 1992, as modified by any guide update or bulletin or as replaced by any other publication of Farmer Mac identified by Farmer Mac as a "Selling Guide" or as a "Servicing Guide." "Servicing Officer": Any officer of the Seller involved in, or responsible for, the administration and servicing of the Qualified Loans whose name and specimen signature appears on a list of servicing officers furnished to Farmer Mac or its designee by the Seller on the applicable Closing Date, as such list may from time to time be amended by delivery of written notice by an existing Servicing Officer. "Substitution Adjustment Principal Amount": As of any date of substitution, the amount, if any, by which the unpaid principal balance of any Defective Qualified Loan for which one or more Eligible Substitute Qualified Loans are substituted on such date of substitution exceeds the aggregate Scheduled Principal Balances of the related Eligible Substitute Qualified Loans. 1.2 Other Definitional Provisions (a) The words "hereof", "herein" and "hereunder" and words of similar import when used herein shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and section, subsection, attachment, schedule and exhibit references are to this Agreement unless otherwise specified. (b) The meaning given to terms defined herein shall be equally applicable to the singular and plural forms of such terms. (c) Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Securities Guide. SECTION 2. SALE AND PURCHASE OF LOANS 2.1 Agreement to Sell and Purchase. Upon the basis of the representations, warranties and agreements herein contained and upon the terms and subject to the conditions set forth herein, Seller agrees to sell to Farmer Mac and Farmer Mac agrees to purchase from Seller on each Closing Date, the Qualified Loans identified in the related Schedule of Qualified Loans for the applicable Purchase Price. 2.2 Conveyance of Qualified Loans. (a) On each Closing Date, concurrently with the execution and delivery of each Loan Sale Supplement and the payment to the Seller of the Purchase Price, the Seller shall sell, transfer, assign, set-over and convey to Farmer Mac or its designee (as Farmer Mac shall designate in writing prior to such Closing Date) all the right, title and interest of the Seller in and to the Qualified Loans. The parties hereto agree that the delivery to the Custodian of any Assignment as contemplated in paragraph (b)(iii) shall be deemed to have taken place immediately after the vesting of title in and to the Qualified Loans in the Custodian on behalf of Farmer Mac, which vesting will have occurred by virtue of the execution by Seller and Farmer Mac of the Loan Sale Supplement, dated the Closing Date, and the delivery of the Mortgage Notes endorsed as described in paragraph (b)(i). (b) In connection with such transfer and assignment described in clause (a) above, Seller will deliver to, or deposit with, the Custodian on behalf of Farmer Mac, the following documents or instruments with respect to each Qualified Loan so assigned: (i) The Mortgage Note, endorsed in the following form: "Pay to the order of First Trust National Association, as Custodian/Trustee without recourse" and showing an unbroken chain of endorsements from the original lender thereof to the Person endorsing it to the Custodian; (ii) The Mortgage with evidence of recording indicated thereon or, if (x) the public recording office retains the original of the Mortgage or (y) the Custodian receives a certificate of a Servicing Officer certifying that the original of the Mortgage is lost, missing or destroyed, a copy of the Mortgage certified by the public recording office in which such Mortgage has been recorded to be a true and complete copy of the original Mortgage; (iii) A copy of the original Assignment in the form "First Trust National Association, as Custodian/Trustee" which assignment or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law and accompanied by an Opinion of Counsel to that effect (a copy of such blanket assignment to be delivered in each applicable Mortgage File) and any intervening assignments in original recorded form evidencing an unbroken chain of assignments from the initial assignor to the Custodian. If the Assignment is not complete due to the lack of necessary recording information for insertion in the Assignment as of the applicable Closing Date, the original Assignment shall be retained by the Seller until such time as the necessary information becomes available, at which time the Seller shall promptly complete the Assignment and forward it to the appropriate office for recordation. Upon completion of recordation, the Seller will forward the original documents (or cause the original documents to be forwarded) to the Custodian; (iv) Evidence of title to the Mortgaged Property (either in the form of an original opinion from an attorney or firm of attorneys or an original or certified copy of a lender's title insurance policy or binding title insurance commitment issued by a title insurance company); (v) Either (1) the original of each modification agreement and each assumption agreement, if any, relating to such Qualified Loan or, if (x) the public recording office retains the original of the modification or assumption agreement or (y) the Custodian receives a certificate of a Servicing Officer certifying that the original of the modification or assumption agreement is lost, missing or destroyed, a copy of the modification (with respect to the Mortgage) or assumption agreement certified by the public recording office in which such Mortgage was recorded to be a true and complete copy of the original modification or assumption agreement, or (2) a signed statement of the Seller that there is no modification agreement or assumption agreement relating to such Qualified Loan (such statement may be part of a list of Qualified Loans as to which no modification agreement or assumption agreement exists); and (vi) Any Additional Collateral Documents relating to such Qualified Loan or a signed statement of the Seller that there is no Additional Collateral Document relating to such Qualified Loan (such statement may be part of a list of Qualified Loans as to which no Additional Collateral Document exists). (c) (i) The Seller acknowledges and understands that ownership of each document comprising a Mortgage File subsequent to the Closing Date is vested in the Custodian on behalf of Farmer Mac. The Seller hereby agrees not to take any action inconsistent with such ownership. (ii) In the event that, in connection with any Qualified Loan, the Seller cannot deliver or cause the delivery of the Mortgage or any modification or assumption agreement with evidence of recording thereon solely because of a delay caused by the public recording office where such Mortgage or modification or assumption agreement has been delivered for recordation, the Seller shall deliver or cause to be delivered to the Custodian a photocopy, certified to be true and correct, of such Mortgage or modification or assumption agreement, as the case may be. The Seller shall promptly deliver or cause to be delivered to the Seller such Mortgage or modification or assumption agreement, as the case may be, with evidence of recording indicated thereon upon receipt thereof from the public recording official. (d) Documents taken as security instruments relating to any of the Qualified Loans and not delivered to the Custodian as part of the Mortgage File shall be held by the Seller in trust for the benefit of Farmer Mac. (e) In the event that, in connection with any Qualified Loan, the Seller cannot deliver or cause to be delivered the Assignment (or blanket Assignment, if applicable) or intervening assignment with evidence of recording indicated thereon, the Seller shall deliver or cause to be delivered to the Custodian a photocopy, certified to be true and correct, of such Assignment. The Seller shall deliver or cause to be delivered to the Custodian such Assignment or intervening assignment with evidence of recording indicated thereon promptly upon receipt thereof from the public recording official or, in the event the original recorded Assignment or intervening assignment is retained by the public recording office or, if the Seller certifies that the original recorded Assignment or intervening assignment, as applicable, is lost, a copy of such recorded Assignment or intervening assignment, as applicable, certified by the public recording office. (f) The Seller shall execute, acknowledge and deliver all other documents furnished it by Farmer Mac as may be necessary to effectuate the transfer to Farmer Mac or its designee of all right, title and interest in and to the Qualified Loans and the Mortgages. (g) If the Custodian finds any document or documents constituting a part of a Mortgage File to be missing, mutilated, torn, damaged or defective on its face, the Custodian shall notify the Seller in writing. The Seller shall then correct or cure such omission or defect or cause such omission or defect to be corrected or cured within 90 days from the date of such notification. If (x) the Seller does not correct or cure such omission or defect or cause such omission or defect to be corrected or cured within such period and (y) such omission or defect relates to any document identified in Section 2.2(b), the Seller shall either (A) replace the related Qualified Loan or cause the related Qualified Loan to be replaced with one or more Eligible Substitute Qualified Loans in the manner and subject to the conditions set forth in Section 4.3 or (B) purchase such Qualified from Farmer Mac by remitting the Repurchase Price with respect to such Qualified Loan to Farmer Mac on date of such purchase. Upon receipt of such Repurchase Price or Eligible Substitute Qualified Loan, Farmer Mac shall promptly release to the Seller or its designee or assignee the related Mortgage File, and shall also execute and deliver such instruments of transfer or assignment prepared or caused to be prepared by the Seller, in each case without recourse, as shall be necessary to vest in the Seller or its designee any Qualified Loan released pursuant thereto. The foregoing remedy shall not be deemed to restrict or limit any right available to Farmer Mac against the Seller or the Originator of the related Qualified Loan. 2.3 Conveyance of Mortgage Servicing Documents. In connection with the transfer and assignment described in Section 2.2 (a) above and the delivery described in Section 2.2 (b) above, the Seller does hereby agree to deliver to, or deposit with, Farmer Mac or its designee, all of the Mortgage Servicing Documents on or before each applicable Closing Date. 2.4 Delivery and Payment; Place of Closing. Subject to satisfaction of the conditions precedent set forth in Section 3 hereof, on each Closing Date, the Seller shall deliver to Farmer Mac or its designee, all of the documents referred to in Section 2.2 (b), together with all interest and principal received on or with respect to the Qualified Loans from and after the Cut-Off Date (other than payments due on such Qualified Loans on or before the Cut-Off Date and other than that portion of any payment of interest received after the Cut-Off Date that represents interest accruing on or prior to the Cut-Off Date). Such delivery shall be made against payment by Farmer Mac of the cash portion, if any, of the Purchase Price to the Seller on the Closing Date by wire transfer in immediately available funds to an account designated by the Seller or by delivery to the Seller of any securities to be received by the Seller. SECTION 3. CONDITIONS PRECEDENT 3.1 Conditions Precedent to Obligations of Parties. The respective obligations of Farmer Mac and the Seller hereunder are subject to the satisfaction, at or prior to each Closing Date, of the following conditions: (a) No Injunction, etc. No preliminary or permanent injunction or other order issued by any Federal or state court of competent jurisdiction in the United States or by any United States Federal or state governmental or regulatory body nor any statute, rule, regulation or executive order promulgated or enacted by any Governmental Authority which restrains, enjoins or otherwise prohibits the transactions contemplated hereby shall be in effect. (b) No Proceeding or Litigation. No suit, action or governmental proceeding before any court or any Governmental Authority shall have been commenced and be pending by any Governmental Authority against Farmer Mac, the Seller or any of their respective affiliates, associates, officers, directors or agents seeking to restrain, prevent or change, in any material respect, the transactions contemplated hereby or seeking damages in any amount material to such transactions. 3.2 Conditions Precedent to Obligation of Seller. The obligation of the Seller to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to each Closing Date of the following additional conditions: (a) Accuracy of Representations and Warranties. The representations and warranties of Farmer Mac contained herein shall be true and correct in all material respects at and as of the Closing Date, with the same force and effect as though made at and as of the Closing Date, except for changes permitted or contemplated by this Agreement and except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct in all material respects as of such date. (b) Secretary's Certificate. At or prior to the first Closing Date under this Agreement (the "initial Closing Date"), the Seller shall have received from Farmer Mac a certificate, dated the initial Closing Date, of Farmer Mac's Secretary, in the form of Exhibit B, certifying the incumbency of those officers of Farmer Mac executing this Agreement, the Loan Sale Supplement or any closing documents delivered hereunder or thereunder, together with certified copies of the resolutions of the Board of Directors of Farmer Mac authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein. 3.3 Conditions Precedent to Obligation of Farmer Mac. The obligation of Farmer Mac to consummate the transactions contemplated by this Agreement is subject to the satisfaction at or prior to each Closing Date of the following additional conditions: (a) Accuracy of Representation and Warranties. The representations and warranties of the Seller contained herein shall be true and correct in all material respects at and as of the Closing Date, with the same force and effect as though made at and as of the Closing Date, except for changes permitted or contemplated by this Agreement and except to the extent that any representation or warranty is made as of a specified date, in which case such representation or warranty shall be true and correct in all material respects as of such date. (b) Performance of Agreements. The Seller shall have performed and complied with, in all material respects, all obligations, agreements and covenants contained in this Agreement to be performed or complied with by it prior to or at the Closing Date. (c) Secretary's Certificate. At or prior to the initial Closing Date, Farmer Mac shall have received from the Seller a Certificate of Authority, dated the initial Closing Date, of the Seller's Secretary, in the form of Exhibit C, certifying the incumbency of those officers of the Seller executing this Agreement, the Loan Sale Supplement or any closing documents delivered hereunder or thereunder, and certifying that the Seller is authorized to execute, deliver and perform this Agreement this Agreement and the consummation of the transactions contemplated herein. (d) Opinions of Counsel. Prior to the initial Closing Date, Farmer Mac shall have received Opinions of Counsel from counsel to the Seller, covering the matters set forth in Exhibit D. (e) Payment of Fees and Expenses. If specified therein, the Seller shall have made all payments of fees and expenses to Farmer Mac as set forth in the Loan Sale Supplement. SECTION 4. REPRESENTATIONS AND WARRANTIES 4.1 Representations and Warranties of Farmer Mac. Farmer Mac represents and warrants to the Seller as follows: (a) Farmer Mac is a federally chartered instrumentality of the United States duly organized, validly existing and in good standing under the laws governing its creation and existence and with corporate power and authority to conduct its business as it is currently being conducted; Farmer Mac holds all licenses, certificates and permits necessary for the conduct of its business as it is currently being conducted. (b) Farmer Mac has the requisite power and authority to execute and deliver this Agreement and the related Loan Sale Supplement, to accept the transfer, assignment and delivery of all of the Qualified Loans and to take all other actions and execute and deliver all other documents which are requisite or pertinent to the transactions described in this Agreement and the Loan Sale Supplement; the persons signing such documents and taking such actions on behalf of Farmer Mac have been duly authorized to do so and such documents and actions are valid, legally binding and enforceable against Farmer Mac in accordance with their terms. (c) No action, suit or proceeding is pending or, to the best of Farmer Mac's knowledge, threatened against Farmer Mac that would prohibit its entering into this Agreement or performing its obligations under this Agreement and the Loan Sale Supplement. 4.2 Representations and Warranties of the Seller. The Seller hereby represents and warrants to Farmer Mac as follows: (a) It is a federally chartered instrumentality of the United States duly organized, validly existing and in good standing under the laws governing its creation and existence and with corporate power and authority to conduct its business as it is currently being conducted; the Seller holds all licenses, certificates and permits necessary for the conduct of its business as it is currently being conducted. (b) It has the requisite power and authority to execute and deliver this Agreement and the Loan Sale Supplement, to transfer, assign and deliver all the Qualified Loans to Farmer Mac and to take all other actions and execute and deliver all other documents which are requisite or pertinent to the transactions described in this Agreement and the Loan Sale Supplement. The persons signing such documents and taking such actions on behalf of the Seller have been duly authorized to do so and such documents and actions are valid, legally binding and enforceable against the Seller in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights generally or the rights of creditors of an institution of the Farm Credit System and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). (c) No action, suit or proceeding is pending or, to the best of its knowledge, threatened against it that would prohibit its entering into this Agreement or performing its obligations under this Agreement and the Loan Sale Supplement. (d) The Seller hereby represents and warrants to Farmer Mac that as of each Closing Date (or, if otherwise specified below, as of the date so specified) with respect to the Qualified Loans: (i) The information set forth in the Schedule of Qualified Loans is true and correct. (ii) Each Mortgage File contains the documents required by Section 2.2(b) of this Agreement. (iii) Each Qualified Loan conforms in all material respects to the provisions of the Securities Guide, including, but not by way of limitation, the following: (A) Each Qualified Loan was originated by an "Originator" as that term is defined in the Securities Guide. (B) The Borrowers under each Qualified Loan are "Eligible Borrowers" as that term is defined in the Securities Guide. (C) Except as otherwise identified in writing by the Seller, none of the Borrowers under any Qualified Loan are "Related Borrowers" as that term is defined in the Securities Guide with respect to any Borrowers under any other Qualified Loan sold by the Seller pursuant to this Agreement. (D) Each Qualified Loan is a "Qualified Loan" as that term is defined in the Securities Guide. (iv) The Qualified Loan: (A) is principally secured by real property (i.e., had a loan-to-value ratio at origination not in excess of 125% and, as of the Cut-Off Date, the Loan-to- Value Ratio is not in excess of 70%); and (B) is not secured by any collateral having material value other than the Mortgage and any Additional Collateral Documents that evidence rights or interests in the Mortgaged Property. (v) (A) Any security agreement, chattel mortgage or equivalent document that is related to the Mortgage has been delivered to Farmer Mac or its designee and is a valid and subsisting lien on the property described in such document. (B) The related Mortgage is a valid first lien on the fee title to the related Mortgaged Property. The Mortgaged Property is free and clear of all mechanics' liens, materialmen's liens or similar types of liens. There are no rights outstanding that could result in any of such liens being imposed on the Mortgaged Property. (C) Appropriate UCC filing statements on fixtures and personal property have been filed and a UCC search has been conducted indicating a security interest in such fixtures and personal property. (vi) In connection with the origination of the Qualified Loan, a lender's title insurance policy was issued by a title insurance company acceptable to Farmer Mac, or, if such policy is unavailable, an opinion of counsel was delivered by an attorney or firm of attorneys rated at least "BV" by Martindale-Hubbell (or approved by Farmer Mac if no such rating is available). The title insurance insures (or the title opinion assures) that a lien of the priority described in clause (v)(B) of this subsection secures the Mortgage Note, and that the property is not subject to encumbrances except those taken into account in the appraisal which established the Appraised Value or which are customarily acceptable to lenders in the area and do not materially impair the value of the property. (vii) Each of the Mortgage Note and Mortgage (including any amendments or modifications to either such document) and each additional security document that evidences rights or interests in the Mortgaged Property has been properly signed, and is the legal, valid and binding obligation of the Borrower, enforceable by Farmer Mac and its successors and assigns in accordance with its terms. (viii) The Mortgage contains customary and enforceable provisions that permit the holder of the Mortgage to obtain marketable title to the Mortgaged Property upon the Borrower's default under the Mortgage Loan. There is no exemption available to the Borrower that would interfere with the right to sell the Mortgaged Property or to foreclose the Mortgage, except for state statutes or regulations respecting rights of redemption or mediation or rights to cure defaults or require restructuring of loans, moratoria on foreclosures or payments, rights of first refusal or homestead rights; provided that no homestead rights exempt from foreclosure any portion of the Mortgaged Property if the value of the remainder of such property would result in a loan-to-value ratio of more than 70% at the Cut-Off Date. (ix) The Mortgage contains a provision for the acceleration of the payment of the unpaid principal balance of the Qualified Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder. (x) The Mortgage Note is payable in monthly, quarterly, semi-annual or annual installments (as specified in the Schedule of Qualified Loans), so as to result in complete amortization (after a final payment of principal that may be substantially disproportionate to the other scheduled payments of principal) of the Mortgage Loan over the stated or calculated term. The Qualified Loans do not provide for negative amortization of interest. (xi) Neither the Mortgage nor the Mortgage Note is usurious and each meets or is exempt from any applicable usury laws or regulations. (xii) All relevant material requirements of federal, state and local laws, rules and regulations then applicable to the making, servicing and assigning of the Qualified Loan were complied with, including, without limitation, equal credit opportunity, disclosure and truth-in-lending laws. (xiii) There are no tax or insurance escrow deposits or escrow payments relating to the Qualified Loan. (xiv) The Mortgage provides that the holder may make advances under the Mortgage to protect the holder's interest in the Mortgaged Property and to protect the Mortgaged Property from loss. Repayment of such advances (including reasonable costs and attorney's fees) plus interest at a default rate of interest is an obligation of the Borrower, secured by the Mortgage. (xv) The Mortgage Note provides either that: (i) any Installment Payment not received by the fifteenth day of the month in which it is due shall accrue interest at a default rate; or (ii) a late charge equal to a percentage of the delinquent Installment Payment must be paid as a penalty if such Installment Payment is not received by the fifteenth day of the month in which it is due. (xvi) The Qualified Loan is not subject to any right of rescission, set-off, counterclaim or defense. (xvii) The Mortgage has not been satisfied, canceled or subordinated. There have been no material modifications or amendments to the Mortgage or other principal mortgage documents except as contained in the Mortgage File delivered to Farmer Mac or its designee. (xviii) There are no defaults under the Mortgage or Mortgage Note and all taxes, governmental assessments, insurance premiums, water, sewer, and municipal charges relating to the Mortgaged Property that previously became due and owing have been paid. (xix) The Qualified Loan has been either not more than: (x) 30 days delinquent in payment of principal or interest during the twelve months preceding the Cut-Off Date or (y) 60 days delinquent in payment of principal or interest during the three years preceding the Cut-Off Date; and (xx) The Seller has not advanced funds to, or induced, solicited or knowingly received any advance of funds (nor will the Seller advance funds, or induce, solicit or knowingly receive any advance of funds) from a party other than the Borrower, directly or indirectly, for the payment of any amount required under the Qualified Loan other than short term loans made in the ordinary course of business. (xxi) An appraisal to establish the Appraised Value of the related Mortgaged Property has been conducted in accordance with the Appraisal Standards. (xxii) All of the improvements on the Mortgaged Property that were included for the purpose of determining the Appraised Value are within the boundaries and building restriction lines of such property, and no improvements on adjoining properties encroach upon the Mortgaged Property. (xxiii) The structures included in the appraisal establishing the Appraised Value of the Mortgaged Property are free of material damage and are in good repair. (xxiv) All improvements on the Mortgaged Property included in the Appraised Value are insured against loss by a Standard Hazard Insurance Policy that conforms to the requirements of the Securities Guide. (xxv) Any applicable zoning laws or regulations or any inspections, licenses or certificates required with respect to the use and occupancy of the related Mortgaged Property were complied with, duly made or issued, as the case may be. (xxvi) The Seller or its agent has physically inspected the related Mortgaged Property and observed its main activities within 180 days prior to the Cut-Off Date and has observed that activities on such Mortgaged Property appeared to have been conducted in a manner conforming to sound environmental practices as currently understood and, to the best of Seller's knowledge: (A) the Borrower has handled on the property only Hazardous Materials customarily used in the operation of a farm or ranch, including ordinary cleaning fluids, fuel oil, fertilizers and pesticides, and only in accordance with any applicable Environmental Statute; (B) the Borrower has not otherwise produced or disposed of Hazardous Materials on the Mortgaged Property; (C) there has been no discharge of Hazardous Materials into waters on or adjacent to the Mortgaged Property, or onto lands from which such substances might seep, flow or drain into such waters in a manner which violates any Environmental Statute; and (D) there has been no event that could give rise to a claim under any Environmental Statute or under common law, pertaining to Hazardous Materials on or originating from the Mortgaged Property or any other real property owned or occupied by the Borrower or arising out of the conduct of the Borrower, including pursuant to any Environmental Statute. (xxvii) There is no proceeding pending, currently occurring or, to the best of Seller's knowledge threatened, for the total or partial condemnation of the Mortgaged Property. (xxviii) The Seller knows of nothing involving the Mortgage, the Mortgaged Property, the Borrower, or the Borrower's credit standing that can reasonably be expected to: (a) cause private institutional investors to regard the Mortgage as an unacceptable investment (b) cause the Mortgage to become delinquent or (c) adversely affect the Mortgage's value or marketability. (xxix) The Qualified Loan is not cross-collateralized with any other mortgaged properties not subject to this Agreement and there are no lenders who own a participation interest in the Qualified Loan. (xxx) To the extent necessary to preserve the value of the Mortgaged Property, a security interest has been properly perfected in any water rights and entitlements associated with the Mortgaged Property and such documentation has been obtained as may be necessary to insure the delivery of water to the Mortgaged Property. (xxxi) The Mortgaged Property is contiguous to a public thoroughfare, or includes such rights-of-way or easements so that a public thoroughfare provides for reasonable ingress and egress to such property. (xxxii) The proceeds of the Qualified Loan have been fully disbursed, there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvements and as to disbursement of any escrow funds therefor have been complied with. All costs, fees, transfer taxes, and expenses incurred in making, closing or recording the Qualified Loan have been paid. Upon discovery by either the Seller or Farmer Mac (including a designee of Farmer Mac) of a breach of any of the representations and warranties set forth in this section 4.2 (b), the Person discovering such breach shall give prompt written notice to the other party. Within 90 days of its discovery or its receipt of notice of any such breach, the Seller shall either (i) cure such breach in all material respects, (ii) purchase the related loan from Farmer Mac by the deposit of the Repurchase Price into an account designated by Farmer Mac, or (iii) replace such Qualified Loan with one or more Eligible Substitute Qualified Loans (but only if such replacement will not have adverse tax or other economic consequences to Farmer Mac or its assignee) in the manner and subject to the conditions set forth in Section 4.3. It is understood and agreed by the parties hereto that the representations and warranties set forth in this subsection 4.2 shall survive delivery of the respective Mortgage Files to Farmer Mac, and delivery thereof by Farmer Mac to its designee, and that all representations and warranties are made by Seller for the express benefit of Farmer Mac and its designee, and that such parties are expressly authorized by Seller to rely on such representations and warranties. 4.3 Replacement of Defective Loans. If the Seller elects to replace a Defective Qualified Loan pursuant to Section 2.2(g) or the penultimate paragraph of Section 4.2, the Seller shall on the date of substitution: (a) convey one or more Eligible Substitute Qualified Loans and deliver the related Mortgage Files to Farmer Mac or its designee as provided in subsection 2.2; and (b) deposit or cause to be deposited in an account designated by Farmer Mac no later than the date of substitution the related Substitution Adjustment Principal Amount, if any, plus (i) interest on such Substitution Adjustment Principal Amount at the Mortgage Rate of the related Defective Qualified Loan from the previous Due Date for such Defective Qualified Loan (or, if there has been no Due Date for such Defective Qualified Loan subsequent to the Cut-Off Date, from the Cut-Off Date) to the date of substitution and (ii) interest on the unpaid principal balance of the related Defective Qualified Loan at the Mortgage Rate thereof from the Cut-Off Date or any Due Date as to which the related Installment Payment had been made to any Due Date prior to the date of substitution as to which the related Installment Payment remains delinquent as of the date of substitution; and (c) deliver to Farmer Mac an Officer's Certificate certifying that the requirements of this Agreement with respect to the replacement of Defective Qualified Loans have been met. 4.4 Absolute and Unconditional Obligation. The Seller agrees that its obligation to cure, repurchase or substitute a Qualified Loan pursuant to Section 4.2 is absolute and unconditional and that it will make any such cure, repurchase or substitution irrespective of any defense, claim, set-off, recoupment, abatement or other right that it may have against Farmer Mac or any other Person, or of any amendment, supplement, waiver or other circumstance, whether similar or dissimilar, which in any manner would constitute a legal or equitable excuse for non- performance by it of such obligation to cure, purchase or substitute. SECTION 5. COVENANTS 5.1 Affirmative Covenants of the Seller. (a) Further Assurances. The Seller agrees, from time to time, at its expense, to execute and deliver promptly to Farmer Mac all further instruments and documents, and take all further action, that may be reasonably necessary, or that Farmer Mac may reasonably request, in order to effectuate the purposes of this Agreement or the Loan Sale Supplement. (b) Access to Documentation. Upon the prior written request of Farmer Mac received reasonably in advance, the Seller shall provide representatives of Farmer Mac reasonable access to documentation regarding the Qualified Loans during normal business hours at the offices of the Seller designated by it. The Seller shall permit such representatives to photocopy any such documentation and shall provide equipment for that purpose. SECTION 6. INDEMNIFICATION 6.1 General. Each party agrees to pay the reasonable costs of the other party if such other party prevails in an action to enforce or remedy the breach or violation of this Agreement by such party. 6.2 Breaches of representations and warranties. The remedy set forth in Section 4.2 with respect to breaches of representations and warranties by the Seller shall not be deemed to restrict or limit any right available to Farmer Mac against the Seller with respect to the Qualified Loans. The Seller agrees to hold Farmer Mac and any assignee of Farmer Mac harmless against any loss or expense (including any incidental or indirect cost) incurred (or to be incurred, as such costs are incurred) to the extent that such loss or expense can reasonably be determined by Farmer Mac to have been (or to be) the result of such breach. SECTION 7. MISCELLANEOUS 7.1 Loan Sale Supplements. A Loan Sale Supplement identifying the Qualified Loans to be sold to Farmer Mac by the Seller on each Closing Date and establishing the terms of such sale shall be substantially in the form annexed hereto as Exhibit A (with such changes thereto as Farmer Mac and the Seller shall agree to), shall have attached thereto a Schedule of Qualified Loans dated as of the date thereof and shall be executed by Farmer Mac and the Seller as of the related Closing Date. Each Loan Sale Supplement shall identify and relate to the particular Qualified Loans. Such Schedule of Qualified Loans shall list all Qualified Loans sold to Famer mac by Seller on the related Closing Date and shall show as to each Qualified Loan the information provided for in Exhibit 2 to the Loan Sale Supplement. The Loan Sale Supplement together with this Master Loan Sale Agreement shall constitute the Loan Sale Agreement with respect to the related Qualified Loans. 7.2 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of Farmer Mac, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive or any rights, remedies, powers or privileges provided by law. 7.3 Counterparts. This Agreement may be executed in any number of separate counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. 7.4 Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, FEDERAL LAW. TO THE EXTENT FEDERAL LAW INCORPORATES STATE LAW, THAT STATE LAW SHALL BE THE LAWS OF THE STATE OF NEW YORK. 7.5 Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) two business days after it is mailed, certified or registered, return receipt requested, with postage prepaid, (c) when sent by telex, telegram or telecopy (with receipt confirmed) or (d) one business day after it is sent by Express Mail, FedEx or other express delivery service, as follows: (a) if to the Seller, to it at: [Seller] [Address] Attention: Telecopy Number: (b) if to Farmer Mac, to it at: Federal Agricultural Mortgage Corporation 919 Eighteenth St., N.W. Suite 200 Washington, DC 20006 Attention: Vice President - Mortgage-Backed Securities Telecopy Number: 202-872-7713 or to such other persons, addresses and telecopier numbers as a party shall specify as to itself by notice in writing to the other party. 7.6 Survival and Termination of Agreement. All covenants, agreements, representations and warranties made herein and in any certificate, document or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement until the later of the receipt by Farmer Mac or its assignee of payment in full in respect of all Qualified Loans and the satisfaction of all of the Mortgages. 7.7 Entire Agreement. This Agreement (which, for this purpose, includes the Loan Sale Supplement) sets forth the entire agreement of the parties hereto with respect to its subject matter, and supersedes all previous understandings, written or oral, with respect thereto. 7.8 Waiver of Jury Trial. The Seller and Farmer Mac hereby irrevocably and unconditionally waive trial by jury in any legal action or preceding relating to this Agreement or the Loan Sale Supplement. 7.9 Severability. Any provision of this Agreement or the Loan Sale Supplement which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or thereof or affecting the validity, enforceability or legality of any such provision in any other jurisdiction. 7.10 Assignability. Except as herein contemplated, neither this Agreement nor the Loan Sale Supplement shall be assigned by either of the parties hereto without the prior written consent of the other party; provided, however, that Farmer Mac may assign this Agreement to any affiliate of Farmer Mac without prior notice or consent of the Seller. 7.11 Third Party Beneficiaries. Any assignee or designee of Farmer Mac, including an assignee holding the Qualified Loans for the benefit of holders of securities guaranteed by Farmer Mac, is a third party beneficiary to this Agreement or the Loan Sale Supplement entitled to enforce the representations and warranties, indemnities and obligations of the parties hereto. Except as otherwise provided, the parties to this Agreement hereby manifest their intent that no third party other than such assignee or designee, including an assignee for the benefit of such holders of securities, shall be deemed a third party beneficiary of this Agreement or the Loan Sale Supplement, and specifically that the Borrowers are not third party beneficiaries of this Agreement or the Loan Sale Supplement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. [SELLER] By: _____________________________________________ Name: Title: FEDERAL AGRICULTURAL MORTGAGE CORPORATION, By:______________________________________________ Name: Henry D. Edelman Title: President and Chief Executive Officer EXHIBIT A LOAN SALE SUPPLEMENT between [SELLER] and FEDERAL AGRICULTURAL MORTGAGE CORPORATION dated as of June 1, 1996 EXHIBIT B FEDERAL AGRICULTURAL MORTGAGE CORPORATION Secretary's Certificate of Farmer Mac I, Michael T. Bennett, hereby certify that I am the duly elected or appointed Secretary of the Federal Agricultural Mortgage Corporation ("Farmer Mac"), and further certify as follows: 1. Attached hereto as Exhibits A, B and C, respectively, are true and correct copies of the Charter and Bylaws of Farmer Mac and the resolutions of the Board of Directors of Farmer Mac authorizing the execution, performance and delivery of the Master Loan Sale Agreement dated as of June 1, 1996 (the "Master Loan Sale Agreement") and the Loan Sale Supplement dated as of June 1, 1996 (the "Loan Sale Supplement"), each between [Seller] ("[Seller]"), as seller and Farmer Mac, each of which is in full force and effect on the date hereof. 2. Each person purporting to execute, either manually or by facsimile signature, on behalf of Farmer Mac (a) the Master Loan Sale Agreement and the Loan Sale Supplement and (b) any other document delivered in connection with the sale and purchase of the Qualified Loans and the closing related thereto was, at the respective times of such signing and delivery, and is, as of the date hereof, duly appointed, qualified and acting as such officer, and was and is duly authorized to accept the duties and make the statements provided for in such documents. The signature of each such person as it appears on any such document is the genuine signature of such person. 3. Farmer Mac has the full power and authority to enter into and consummate all transactions contemplated by the Master Loan Sale Agreement and the Loan Sale Supplement, has duly authorized the execution, delivery and performance of the Master Loan Sale Agreement and the Loan Sale Supplement and has duly executed and delivered the Master Loan Sale Agreement and the Loan Sale Supplement. 4. At the date hereof, each of the Master Loan Sale Agreement and the Loan Sale Supplement is in full force and effect as regards Farmer Mac, and the representations and warranties of Farmer Mac set forth in Section 4.1 of the Master Loan Sale Agreement are accurate and complete. Capitalized terms used and not otherwise defined herein shall have the meanings specified in the Master Loan Sale Agreement and the Loan Sale Supplement. IN WITNESS WHEREOF, I have hereunto signed my name on behalf Farmer Mac on and as of this 6th day of June, 1996. FEDERAL AGRICULTURAL MORTGAGE CORPORATION By:_________________________________________ Name: Michael T. Bennett Title: Secretary I, Christopher A. Dunn, a Vice President of the Federal Agricultural Mortgage Corporation, hereby certify that Michael T. Bennett is the duly appointed, qualified and acting Secretary of the Federal Agricultural Mortgage Corporation and that the signature appearing above is his genuine signature. By: ___________________________________________ Name: Christopher A. Dunn Title: Vice President-Mortgage-Backed Securities EXHIBIT C [SELLER] Secretary's Certificate of Seller I, [ ], hereby certify that I am the duly elected or appointed Secretary of [Seller], and further certify as follows: 1. Attached hereto as Exhibits A and B, respectively, are true and correct copies of the Charter and Bylaws of [Seller] each of which is in full force and effect on the date hereof. 2. Each person purporting to execute, either manually or by facsimile signature, on behalf of [Seller] (a) the Master Loan Sale Agreement dated as of June 1, 1996 (the "Master Loan Sale Agreement") and the Loan Sale Supplement dated as of June 1, 1996 (the "Loan Sale Supplement"), each between [Seller], as seller, and the Federal Agricultural Mortgage Corporation, as purchaser, and (b) any other document delivered in connection with the sale and purchase of the Qualified Loans and the closing related thereto was, at the respective times of such signing and delivery, and is, as of the date hereof, duly appointed, qualified and acting as such officer, and was and is duly authorized to accept the duties and make the statements provided for in such documents. The signature of each such person as it appears on any such document is the genuine signature of such person. 3. [Seller] has the full power and authority to enter into and consummate all transactions contemplated by the Master Loan Sale Agreement and the Loan Sale Supplement, has duly authorized the execution, delivery and performance of the Master Loan Sale Agreement and the Loan Sale Supplement and has duly executed and delivered the Master Loan Sale Agreement and the Loan Sale Supplement. 4. At the date hereof, each of the Master Loan Sale Agreement and the Loan Sale Supplement is in full force and effect as regards [Seller], and the representations and warranties of [Seller] set forth in Section 4.2 of the Master Loan Sale Agreement are accurate and complete. Capitalized terms used and not otherwise defined herein shall have the meanings specified in the Master Loan Sale Agreement and the Loan Sale Supplement. IN WITNESS WHEREOF, I have hereunto signed my name on behalf [Seller] on and as of this _th day of ____, 199_. [SELLER] By:________________________________ Name: Title: Secretary I, , a of [Seller, hereby certify that_________________________________ is the duly appointed, qualified and acting Secretary of [Seller] and that the signature appearing above is [his/her] genuine signature. By:______________________________ Name: Title: EXHIBIT D [FORM OF OPINION OF COUNSEL TO THE SELLER] [Letterhead of [ ]Esq.] , 1996 Federal Agricultural Mortgage Corporation 919 18th Street, N.W. Suite 200 Washington, DC 20006 Re: Sale of Qualified Loans Dear Sir or Madam: I have acted as counsel to [Seller], a [ ] (the "Seller") in connection with the sale of Qualified Loans (the "Qualified Loans") to Farmer Mac pursuant to the Master Loan Sale Agreement dated as of June 1, 1996 (the "Master Loan Sale Agreement") and the Loan Sale Supplement dated as of June 1, 1996, each between [the Seller], as Seller and Farmer Mac. Unless indicated otherwise, all capitalized terms used herein shall have the meanings assigned to them in the Loan Sale Supplement. In that connection, I have examined originals, or copies certified or otherwise identified to my satisfaction, of such documents, corporate records and other instruments as I have deemed necessary or appropriate for the purposes of this opinion. As to matters of fact, I have examined and relied upon representations of the parties contained in each of the Master Loan Sale Agreement and the Loan Sale Supplement and, where I have deemed appropriate, representations or certifications of officers of [Seller] or public officials. I have assumed the authenticity of all documents submitted to me as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to me as copies. I have assumed that all parties, except for [Seller], had the corporate power and authority to enter into and perform all obligations under such documents, and, as to such parties, I also have assumed the due authorization by all requisite corporate action, the due execution and delivery and the validity, binding effect and enforceability of such documents. I have further assumed the conformity of the Qualified Loans and related documents to the requirements of each of the Master Loan Sale Agreement and the Loan Sale Supplement. In rendering this opinion letter, I do not express any opinion concerning the securities laws of any jurisdiction. I do not express any opinion on any issue not expressly addressed below. Based upon the foregoing, I am of the opinion that: (a) [Seller] is an instrumentality duly organized, validly existing and in good standing under the laws of the United States, with corporate power and authority to conduct its business as it is currently being conducted. (b) [Seller] has the requisite power and authority to execute and deliver each of the Master Loan Sale Agreement and the Loan Sale Supplement and to perform its obligations under such Agreements. (c) Each of the Master Loan Sale Agreement and the Loan Sale Supplement has been duly authorized, executed and delivered by [Seller] and constitutes a valid and binding agreement of [Seller], enforceable against [Seller] in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law). (d) There are no actions, proceedings or investigations pending, or to the best of my knowledge, threatened against [Seller] before any court, administrative agency or other tribunal (a) asserting the invalidity of either of the Master Loan Sale Agreement or the Loan Sale Supplement, (b) seeking to prevent the consummation of any of the transactions contemplated by the Master Loan Sale Agreement and the Loan Sale Supplement, or (c) that might reasonably be expected to materially and adversely affect the performance by [Seller] of its obligations under, or the validity or enforceability of, either of the Master Loan Sale Agreement or the Loan Sale Supplement. (e) Neither the consummation of any other of the transactions contemplated by the Master Loan Sale Agreement and the Loan Sale Supplement nor the compliance by [Seller] with any of the provisions thereof will conflict with, constitute a default under or violate any applicable [Seller's state] or federal laws or regulations. (f) No consent, approval, authorization or order of any court, regulatory or supervisory authority or governmental agency or body is required for the consummation by [the Seller] of the transactions contemplated in each of the Master Loan Sale Agreement and the Loan Sale Supplement or for the performance by [the Seller] of the transactions or obligations contemplated in therein. (h) [the Seller] is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, county or municipal agency, which default might have consequences that would materially and adversely affect its condition (financial or other), operations or properties or might have consequences that would materially and adversely affect its performance under each of the Master Loan Sale Agreement and the Loan Sale Supplement. I am a member of the bar of the State of [ ] and express no opinion as to the laws of any jurisdiction other than those of the State of [ ] and the laws of the United States of America. I am furnishing this opinion letter to you solely for your benefit. This opinion is not to be used, circulated, quoted or otherwise referred to for any other purpose. Very truly yours, EX-4 5 EXHIBIT 4.3 PROPOSED FROM OF TRUST AGREEMENT-GRANTOR TRUSTS FEDERAL AGRICULTURAL MORTGAGE CORPORATION GUARANTEED GRANTOR TRUST AGRICULTURAL MORTGAGE-BACKED SECURITIES PROGRAM FORM OF TRUST AGREEMENT THIS TRUST AGREEMENT made, executed and published as of the first day of June 1996, at Washington, D.C., among the Federal Agricultural Mortgage Corporation (herein called "Farmer Mac"), a federally chartered instrumentality of the United States, Farmer Mac Mortgage Securities Corporation (herein called "FMMSC"), a corporation organized and existing under the laws of the State of Delaware, and First Trust National Association, a national banking association (the "Trustee"); W I T N E S S E T H WHEREAS, Farmer Mac is authorized pursuant to Title VIII of the Farm Credit Act of 1971, as amended (the "Act"), to guarantee the timely payment of principal and interest in respect of securities evidencing undivided beneficial interests in trust funds comprised of agricultural mortgage loans conforming to the Act ("Qualified Loans"); WHEREAS, FMMSC has purchased and intends to purchase Qualified Loans; WHEREAS, FMMSC intends to assemble groups of such Qualified Loans and to transfer and assign the same to the Trustee in exchange for securities evidencing undivided beneficial interests in the related trust fund or trust funds (each a "Trust Fund"); WHEREAS, Farmer Mac intends to service the Qualified Loans held in each such Trust Fund and, pursuant to the Act, to guarantee to the holders of securities evidencing undivided beneficial interests in each such Trust Fund the timely distribution of all amounts of principal and interest required to be distributed thereon; NOW, THEREFORE, the parties to this Trust Agreement, in the several capacities hereinabove set forth, do hereby declare and establish this Trust Agreement and do hereby undertake and otherwise agree as follows: ARTICLE I Defined Terms Section 1.01. General Definitions. Whenever used in this Trust Agreement, the following words and phrases shall have the following meanings: Act: Title VIII of the Farm Credit Act of 1971, as amended (12 U.S.C. 2279aa). Advance: As to any Distribution Date and Trust Fund, any amount advanced with respect to such Distribution Date by the related Central Servicer or Central Servicers as required by the applicable Servicing Contract. Agreement: With respect to any Series, the collective provisions of this Trust Agreement and the related Issue Supplement. Aggregate Certificate Principal Balance: The aggregate of the Certificate Principal Balances of all Certificates of a Series as of the date of determination. Amounts Held for Future Distribution: With respect to any Series and Distribution Date, the total of all amounts held in the Collection Account on the preceding Certificate Account Deposit Date on account of (i) Principal Prepayments, Liquidation Proceeds and REO Proceeds received subsequent to the preceding Prepayment Period, (ii) Installment Payments due subsequent to the preceding Due Date and (iii) if such Series is comprised of two or more Classes having different Distribution Dates, all proceeds of the related Qualified Loans for the Class or Classes as to which such Distribution Date is not a Distribution Date. Appraisal Standards: With respect to any Series, the updated appraisal/reappraisal standards at the time of the related Issue Supplement acceptable to Farmer Mac. Appraised Value: The appraised value of a Mortgaged Property, which is the appraised value based upon the appraisal conducted in accordance with the Appraisal Standards. Authorized Officer: The Chairman of the Board, the President or any Vice President of Farmer Mac or FMMSC, as the context requires. Balloon Payment: With respect to any Qualified Loan that provides for the principal portion of the Installment Payments due thereon based on an amortization schedule more than one year longer than the remaining term to stated maturity of such Qualified Loan, the principal amount due on the stated maturity date of such Qualified Loan. Balloon Qualified Loan: Any Qualified Loan having a Balloon Payment. Borrower: With respect to any Qualified Loan, the obligor or obligors thereon. Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day on which the Federal Reserve Bank of New York authorizes banking institutions in the Second Federal Reserve District to be closed, (iii) a day on which banking institutions in the State of Minnesota or New York are required or authorized by law to be closed, or (iv) a day on which the offices of Farmer Mac are closed. Central Servicer: With respect to any Trust Fund, the Person or Persons which shall at the time be directly servicing the Qualified Loans included therein pursuant to a Servicing Contract. Central Servicer Fee Rate: With respect to any Qualified Loan, a percentage per annum rate (inclusive of any sub-servicer fee rate) specified in or calculated as described in the related Issue Supplement. Certificate: A Guaranteed Grantor Trust Agricultural Mortgage-Backed Security which is issued in book-entry form and is maintained in the name of a record owner as an entry on the books of a Reserve Bank under a designation specifying the Series, Class and denomination thereof. Certificate Account: As to any Series, the account created and maintained pursuant to Section 5.01. Certificate Account Deposit Date: With respect to a Series, the fifteenth day of each month (or if such fifteenth day is not a Business Day, the Business Day next succeeding such fifteenth day), beginning with the month following the month of the Cut-off Date. Certificate Distribution Amount: With respect to a particular Series and Distribution Date, the sum of (a) all interest accrued on the then outstanding Certificates for the Interest Accrual Period immediately preceding such Distribution Date (other than interest accrued on any Class as to which such date is not a Distribution Date); (b) the Principal Distribution Amount for such Distribution Date; and (c) to the extent specified in the related Issue Supplement, all Prepayment Premiums collected (as opposed to due) during the preceding Prepayment Period. Certificate Distribution Amount Determination Date: With respect to a Series and Distribution Date, a date on or before the fifth Business Day during the month of such Distribution Date. Certificate Interest Rate: With respect to any Class, the annual rate at which interest accrues on the Certificates of such Class, as specified or described in the related Issue Supplement. Certificate Principal Balance: As to any Certificate (other than an Interest Only Certificate) prior to the initial Distribution Date for the related Trust Fund, the denomination thereof and, as to any Certificate subsequent to such initial Distribution Date, the denomination thereof multiplied by the applicable Certificate Principal Factor. Certificate Principal Factor: As of any date of determination and as to any Class of Certificates (other than an Interest Only Class), a fraction the numerator of which is (i) the aggregate of the denominations of all Certificates of such Class less (ii) the aggregate amount of all Principal Distribution Amounts, if any, allocable thereto prior to such date of determination and the denominator of which is the aggregate of the denominations of all Certificates of such Class. As to any Interest Only Class, a fraction calculated in the manner described in the related Issue Supplement. Certificateholder or Holder: As to any Certificate, the record owner on the appropriate Reserve Bank's books. Class: With respect to any Series, all Certificates of such Series with the same terms. Class Certificate Principal Balance: With respect to any Class at any time, the aggregate of the Certificate Principal Balances of all Certificates of such Class. Class Notional Principal Balance: With respect to any Interest Only Class at any time, the aggregate of the Notional Principal Balance of all Certificates of such Class. Closing Date: As to any Series, the date specified in the related Issue Supplement. Code: The Internal Revenue Code of 1986, including any successor or amendatory provisions. Collection Account: As to any Series, the account created and maintained pursuant to Section 4.05. Curtailment: Either (i) any Principal Prepayment made by a Borrower that is not a Principal Prepayment in Full, (ii) any amount deemed to be such in connection with a substitution pursuant to Section 4.03, (iii) any REO Principal Amortization Amount or (iv) any Insurance Proceeds or other recoveries that are not Liquidation Proceeds and were applied to reduce the principal balance of the related Qualified Loan. Custodial Agreement: The agreement dated of even date herewith between the Trustee, as custodian, and Farmer Mac, pursuant to which the Trustee acts as custodian for the Required Documents on behalf of the related Trust Fund. Cut-Off Date: As to any Series, the first day of the month during which Certificates of such Series are initially issued. Cut-Off Date Principal Balance: With respect to any Qualified Loan, the unpaid principal balance thereof at the Cut- Off Date after giving effect to all amounts payable on or prior thereto, whether or not paid. With respect to any Substitute Qualified Loan the unpaid principal balance thereof at the date of substitution thereof after giving effect to all amounts payable on or prior thereto, whether or not paid. Distribution Date: As to any Class, the 25th day (or if such 25th day is not a Business Day, the Business Day immediately following) of each month specified in the related Issue Supplement as a month for a Distribution Date for the Certificates of such Class. Due Date: With respect to any Qualified Loan, each date upon which an installment of interest and principal, if any, is due in accordance with the amortization schedule initially applicable thereto. Due Period: With respect to any Class and Distribution Date, the period beginning immediately following the preceding Due Period (or immediately following the Cut-Off Date in the case of the initial Distribution Date) and ending on and including the Due Date in the month of such Distribution Date. Eligible Depository: Any Reserve Bank, the Trustee or any other depository institution or trust company approved in writing by an Authorized Officer of Farmer Mac incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal or state banking authorities. Eligible Investments: Any one or more of the following obligations or securities: (i) direct obligations of, and obligations fully guaranteed by, the United States of America, Farmer Mac, or any other agency or instrumentality of the United States of America; (ii) as to any Collection Account, any other obligation or security specified in the related Servicing Contract; and (iii) as to any Series, any other obligation or security specified in the related Issue Supplement. Event of Default: An event as described in Section 7.03. Farmer Mac: Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States, or its successor in interest or any successor appointed as herein provided. Farmer Mac Guarantee: With respect to any Series, the guarantee obligations of Farmer Mac with respect to the Certificates of such Series pursuant to Section 5.05 hereof. Final Distribution Date: As to any Class, the Distribution Date specified in the related Issue Supplement as being the Distribution Date on or before which the Certificate Principal Balance or, in the case of an Interest Only Class, Notional Principal Balance of each Certificate within such Class shall have been reduced to zero. FMMSC: Farmer Mac Mortgage Securities Corporation, a corporation organized and existing under the laws of the State of Delaware, or its successor in interest. Guarantee Fee: With respect to any Series, the fee payable to Farmer Mac pursuant to Section 5.03 and calculated in the manner described in the related Issue Supplement. Guarantee Reimbursement Amount: With respect to any Trust Fund, the excess, if any of amounts paid by Farmer Mac pursuant to Section 5.05 to Holders of Certificates evidencing beneficial interests therein, over amounts received by Farmer Mac (other than Guarantee Fees or other fees or expenses otherwise payable to it) in reimbursement therefor. Holders: With respect to any Trust Fund, all of the Holders of Certificates evidencing beneficial ownership interests therein. Installment Payment: As to any Qualified Loan (including any REO Qualified Loan) and any Due Date, the payment of principal and/or interest due thereon in accordance with the amortization schedule provided at the time applicable thereto (after adjustment, if any, for any Curtailments occurring prior to such Due Date but before any other adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period). Interest Accrual Period: With respect to any Class and Distribution Date, the period prior thereto specified in the related Issue Supplement. Interest Only Certificate: Any Certificate evidencing all or part of an Interest Only Class. Interest Only Class: Any Class identified as such in the related Issue Supplement. Issue Supplement: An instrument executed by the parties hereto pursuant to Section 2.01 which supplements this Trust Agreement and identifies and establishes, among other things, a particular Trust Fund and a particular Series of Certificates related to such Trust Fund. Liquidated Qualified Loan: Any defaulted Qualified Loan as to which Farmer Mac has determined that all amounts it expects to recover from or on account of such Qualified Loan have been recovered, provided, however, that a defaulted Balloon Qualified Loan shall be deemed to be a Liquidated Qualified Loan in the absence of any such determination on the second anniversary of the Due Date for the related Balloon Payment. Liquidation Expenses: Expenses incurred by or on behalf of Farmer Mac in connection with the liquidation of any defaulted Qualified Loan, including, without limitation, legal fees and expenses, brokerage commissions paid to third parties, any premiums for hazard insurance policies maintained with respect to any related REO Property, any fees to third parties hired to issue environment reports with respect to or to manage any related REO Property and any related and unreimbursed expenditures for real estate and conveyance taxes or for property restoration or preservation. Liquidation Proceeds: Cash received in connection with the liquidation of defaulted Qualified Loans and REO Qualified Loans, whether through trustee's sale, foreclosure sale or otherwise. Loan Sale Agreement: The agreement between a Seller and Farmer Mac pursuant to which the Seller conveys Qualified Loans to FMMSC, as Farmer Mac's designee, and makes certain representations and warranties to Farmer Mac, FMMSC and their respective successors and assigns. Master Trustee Agreement: The agreement, as the same may be amended from time to time, between Farmer Mac and the Trustee. Mortgage Rate: As to any Qualified Loan, the per annum rate of interest borne thereby. Net Liquidation Proceeds: With respect to any Liquidated Qualified Loan, Liquidation Proceeds net of Liquidation Expenses not previously reimbursed out of REO Proceeds or otherwise. Net Mortgage Rate: As to any Qualified Loan, the Mortgage Rate borne thereby net of the Central Servicer Fee Rate. Opinion of Counsel: A written opinion of counsel, who may be counsel for Farmer Mac. Officer's Certificate: A certificate signed by an Authorized Officer of Farmer Mac or FMSSC, as the context requires. Nonrecoverable Advance: Any portion of an Advance previously made or proposed to be made in respect of a Qualified Loan which has not been previously reimbursed to the Central Servicer and which, in the good faith judgment of the Central Servicer, will not or, in the case of a proposed Advance, would not be ultimately recoverable from future Borrower payments or from Net Liquidation Proceeds, REO Proceeds or other recoveries in respect of the related Qualified Loan. The determination by the Central Servicer that it has made a Nonrecoverable Advance or that any proposed advance, if made, would constitute a Nonrecoverable Advance shall be evidenced by a written notification by the Central Servicer delivered to the Trustee, with a copy to Farmer Mac, stating (i) the amount of such Nonrecoverable Advance and (ii) that the Central Servicer has determined in good faith that such advance is or would be a Nonrecoverable Advance in accordance with the terms hereof. Notional Principal Balance: As to any Interest Only Certificate prior to the initial Distribution Date therefor, the denomination thereof, and as to any Interest Only Certificate subsequent to such initial Distribution Date, the denomination thereof multiplied by the then applicable Certificate Principal Factor. Participation Certificate: An instrument evidencing an interest in one or more Qualified Loans. Person: Any legal person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Prepayment Period: With respect to any Class and Distribution Date, the period beginning immediately following the preceding Prepayment Period (or immediately following the calendar month next preceding the Cut-Off Date in the case of the initial Distribution Date) and ending on the last day of the calendar month next preceding the month of such Distribution Date. Prepayment Premium: With respect to any Qualified Loan, any premium or yield maintenance payment paid or payable, as the context requires, by the related Borrower in connection with any Principal Prepayment. Principal Distribution Amount: With respect to a particular Class and Distribution Date, the sum of (a) all Curtailments received with respect to the Related Qualified Loans during the previous Prepayment Period; (b) the Scheduled Principal Balance of each Related Qualified Loan which was the subject of a Principal Prepayment in Full during the preceding Prepayment Period or which became a Liquidated Qualified Loan during such preceding Prepayment Period; (c) the principal component of each Installment Payment due in respect of each Related Qualified Loan during the preceding Due Period (other than any Balloon Payment); and (d) if such Distribution Date is a Final Distribution Date for a Class, any amount by which the Class Certificate Principal Balance therefor would be greater than zero after distribution in accordance with the applicable priorities of the amounts specified in (a) - (c) above. With respect to a particular Special Distribution Date, the amount allocable to principal which is distributed by Farmer Mac under the circumstances and subject to the conditions set forth in Section 5.06 and the related Issue Supplement. Principal Prepayment: Any payment or other recovery of principal on a Qualified Loan that is received in advance of its scheduled Due Date and is not accompanied by an amount as to interest representing scheduled interest due on any date or dates in any period subsequent to the Prepayment Period in which such prepayment occurs. Principal Prepayment in Full: Any payment received on a Qualified Loan that is in excess of the installment of principal and interest due thereon in an amount sufficient to pay the entire principal balance of such Qualified Loan. Purchase Price: As to any Qualified Loan, the unpaid principal balance thereof together with accrued and unpaid interest thereon at the Net Mortgage Rate to the Due Date next preceding the Distribution Date upon which the net proceeds of such Purchase Price are to be distributed to Certificateholders. Qualified Loan: With respect to any Trust Fund, any mortgage loan included therein. Qualified Loan Schedule: With respect to any Trust Fund, the loan file set-up portion of the Farmer Mac tape specifications attached as Schedule I hereto. Record Date: As to any Distribution Date, the last day of the month next preceding the month of such Distribution Date. Related Qualified Loan: With respect to any Class included in a Series comprised of two or more Classes, any Qualified Loan identified in the related Qualified Loan Schedule as pertaining to such Class. REO Principal Amortization Amount: With respect to any REO Qualified Loan and Prepayment Period, any amount, as determined by Farmer Mac, by which aggregate related REO Proceeds received during a Prepayment Period are in excess of interest that would have accrued during such period on the related REO Qualified Loan and expenses payable in respect of such REO Property during such Prepayment Period. REO Proceeds: Proceeds, other than Liquidation Proceeds, received in respect of any REO Qualified Loan (including, without limitation, proceeds from the rental of the related Mortgaged Property). REO Property: Any Mortgaged Property that has been acquired by a Trust Fund by foreclosure, deed-in-lieu of foreclosure or otherwise. REO Qualified Loan: Any Qualified Loan (whether or not the related indebtedness has been extinguished) that is not a Liquidated Qualified Loan and as to which the related Mortgaged Property is held as part of the Trust Fund. Required Documents: As to each Qualified Loan (other than a Qualified Loan represented by a Participation Certificate) the documents specified in Section 2.05. Reserve Bank: Any Federal Reserve Bank, including its branches. Responsible Officer: When used with respect to the Trustee, any officer of the Trustee, including any Chairman or any President, any Vice President, any Assistant Vice President, any Assistant Treasurer, any Trust Officer, any Assistant Secretary or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. Scheduled Principal Balance: As to any Qualified Loan and any Distribution Date, the principal balance of such Qualified Loan as of the beginning of the related Due Period, as specified in the amortization schedule at the time relating thereto (after adjustment, if any, for Curtailments occurring prior to the related Prepayment Period but before any other adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period), after giving effect to the payment of principal due prior to such Due Period whether or not received from the related Borrower (other than any Balloon Payment). Seller: Any entity that sold Qualified Loans to FMMSC and that is identified as a Seller in the Qualified Loan Schedule. Series: A separate series of Certificates issued pursuant to this Agreement and the related Issue Supplement. Servicing Contract: The agreement between Farmer Mac and any Central Servicer relating to the direct servicing by such Central Servicer of Qualified Loans for a particular Trust Fund. Special Distribution Date: Any date on which Farmer Mac elects or is required to make a distribution under the circumstances and subject to the conditions set forth in Section 5.06 and the related Issue Supplement, any such date for a Series being the 25th day (or if such 25th day is not a Business Day, the Business Day immediately following) of any month (other than any month in which a Distribution Date for the related Class occurs). Special Record Date: As to any Special Distribution Date, the date as of which Certificateholders entitled to a special distribution are determined, any such date being the last day of the month next preceding the month of such Special Distribution Date. Substitute Qualified Loan: Any loan substituted for a defective Qualified Loan pursuant to Section 4.03. Trust Agreement: This Trust Agreement, dated as of June 1, 1996, by and among the Trustee, Farmer Mac and FMMSC, as the same is originally executed, or as modified, amended or supplemented in accordance with the applicable provisions hereof. Trust Fund: As to any particular Series of Certificates, the corpus of the trust created by this Trust Agreement and the Issue Supplement applicable thereto, consisting of (a) the Qualified Loans and all proceeds thereof, (b) the Collection Account, the Certificate Account and all cash and investments held therein and (c) the Farmer Mac Guarantee applicable to the related Certificates pursuant to Section 5.05. Trustee: First Trust National Association, a national banking association, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. ARTICLE II Applicable Documentation; Conveying of Qualified Loans Section 2.01. Issue Supplement. An Issue Supplement establishing a Trust Fund and creating the Certificates evidencing beneficial ownership interests therein shall be executed by the Trustee, Farmer Mac and FMSSC. Each Issue Supplement shall identify and relate to a particular Series of Certificates evidencing beneficial ownership interests in the related Trust Fund. Farmer Mac shall prepare and maintain for each such Trust Fund a Qualified Loan Schedule conforming, except as set forth in such Issue Supplement, to the definition thereof in Article I hereof. Section 2.02. Issue Supplement and Trust Agreement. With respect to each Trust Fund established by an Issue Supplement and the related Certificates, the collective terms of this Trust Agreement and such Issue Supplement shall govern the issuance and administration of all Certificates related to such Trust Fund, and all matters related thereto, and shall have no applicability to any other Trust Fund or Certificates. As applied to each Trust Fund established by an Issue Supplement, and the related Certificates, the collective terms of such instruments shall constitute an agreement relating exclusively to such Trust Fund and Certificates to like effect as if the collective terms of all such instruments were set forth in a separate instrument, duly executed and delivered by the respective signatories to this Trust Agreement. Section 2.03. Authorized Officers. The manual or facsimile signature of any individual appearing on an Issue Supplement, designated as the signature of an Authorized Officer of Farmer Mac or FMSSC, shall constitute conclusive evidence that such individual is, in fact, authorized by Farmer Mac or FMSSC, as the case may be, to execute such Issue Supplement, notwithstanding that such authorization may have lapsed prior to the effective date of such Issue Supplement. Section 2.04. Delivery of Instruments. The Trustee shall furnish to each Certificateholder, upon request, copies of this Trust Agreement and the related Issue Supplement, without attachments, applicable to the Certificate or Certificates held by such Holder. Section 2.05. Conveyance of Qualified Loans. (a) Concurrently with the execution and delivery of an Issue Supplement, FMMSC shall transfer, assign, set over and otherwise convey to the Trustee, on behalf of Holders of Certificates evidencing beneficial interests therein, all of FMMSC's right, title and interest in and to the Qualified Loans identified in the attached Qualified Loan Schedule, including all payments of principal and interest thereon received after the respective date or dates on which the Cut-Off Date Principal Balance was determined (other than payments permitted to be retained by FMMSC by the terms hereof, including payments of principal and interest due on or before the Cut-Off Date). In connection with any such conveyance, Farmer Mac shall be deemed to have assigned to the Trustee for the benefit of Certificateholders all of Farmer Mac's rights under each applicable Loan Sale Agreement, including, but not limited to, the right to enforce the representations and warranties therein against the related Seller. (b) In connection with any such transfer (other than pursuant to a Participation Certificate) of a Qualified Loan, FMMSC shall cause to be delivered to the Trustee: (i) The related Mortgage Note endorsed to the order of "First Trust National Association, as Custodian/Trustee" by the Seller thereof, together with such other related documents as shall be specified in the Custodial Agreement. In the case of Qualified Loans evidenced by a Participation Certificate, FMMSC shall denote on the face of such Participation Certificate that it has been assigned to the Trustee for the exclusive benefit of Holders of Certificates evidencing beneficial interests in the related Trust Fund; (ii) The Mortgage with evidence of recording indicated thereon or, if (x) the public recording office retains the original of the Mortgage or (y) the Trustee receives a certificate executed by two officers of the Seller certifying that the original of the Mortgage is lost, missing or destroyed, a copy of the Mortgage certified by the public recording office in which such Mortgage has been recorded to be a true and complete copy of the original Mortgage; (iii) A copy of the original assignment in the form "First Trust National Association, as Custodian/Trustee" which assignment or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law and accompanied by an Opinion of Counsel to that effect (a copy of such blanket assignment to be delivered in each applicable loan file) and any intervening assignments in original recorded form evidencing an unbroken chain of assignments from the initial assignor to the Trustee. If the assignment is not complete due to the lack of necessary recording information for insertion in the assignment as of the applicable Closing Date, the original assignment will be retained by FMMSC until such time as the necessary information becomes available, at which time FMMSC shall promptly complete, or cause the Seller to complete, the Assignment and forward, or cause the Seller to forward, it to the appropriate office for recordation. Upon completion of recordation, FMMSC will forward the original documents (or cause the original documents to be forwarded) to the Trustee; (iv) Evidence of title to the Mortgaged Property (either in the form of an original opinion from an attorney or firm of attorneys or an original or certified copy of a lender's title insurance policy or binding title insurance commitment issued by a title insurance company); and (v) Either (1) the original of each modification agreement and each assumption agreement, if any, relating to such Qualified Loan or, if (x) the public recording office retains the original of the modification or assumption agreement or (y) the Trustee receives a certificate executed by two officers of the Seller certifying that the original of the modification or assumption agreement is lost, missing or destroyed, a copy of the modification (with respect to the Mortgage) or assumption agreement certified by the public recording office in which such Mortgage was recorded to be a true and complete copy of the original modification or assumption agreement, or (2) a signed statement of the Seller that there is no modification agreement or assumption agreement relating to such Qualified Loan (such statement may be part of a list of Qualified Loans as to which no modification agreement or assumption agreement exists). Section 2.06. Review and Certification of Required Documents and Safekeeping of Documents. The Trustee shall review the completeness of the Required Documents, certify as to such review as provided in the Custodial Agreement and otherwise conform to the applicable provisions of the Custodial Agreement. ARTICLE III The Certificates Section 3.01. Certificates Issuable in Series and Classes; General Provisions with Respect to Principal and Interest Distributions. Each Series of Certificates may consist of only one Class or may be divided into two or more Classes and shall be designated generally as Guaranteed Grantor Trust Agricultural Mortgage-Backed Securities, with such particular designations added or incorporated in such title for the Certificates of any particular Series or Class as shall be specified in the related Issue Supplement. The aggregate amount of principal of and interest distributable on the Certificates of any Series on any Distribution Date shall be equal to the Certificate Distribution Amount for such Series on such Distribution Date with the principal component of such amount being equal to the related Principal Distribution Amount. Distributions of any such Principal Distribution Amount shall be made in such amounts as among Classes of Certificates, and subject to such other conditions, as are provided in the Issue Supplement with respect to such Series. All distributions of such Principal Distribution Amount for any such Distribution Date which are made with respect to a particular Class of Certificates shall be made pro rata among all Certificates of such Class in proportion to their respective principal denominations, with no preference or priority of any kind. All distributions made with respect to any Certificate on any Distribution Date shall be applied first to the interest, if any, distributable thereon on such Distribution Date and then to the principal, if any, thereof. All computations of interest accrued on any Certificate shall be made as if each year consisted of twelve months of thirty days each. Interest accrued on any Certificate of a Series during any Interest Accrual Period shall be distributable on the following Distribution Date for such Series at the Certificate Interest Rate applicable to such Certificate applied to the Certificate Principal Balance or, in the case of an Interest Only Certificate, the Notional Principal Balance thereof. Section 3.02. Issuance of Certificates. The Certificates of any Series shall be issued in book-entry form and shall be maintained in the names of the record owners thereof as entries on the books of a Reserve Bank. The Certificates of any Series shall be in such authorized denominations as shall be specified in the applicable Issue Supplement and may be transferred or pledged in accordance with and subject to then applicable regulations governing Farmer Mac's use of the book-entry system (as the same shall be in effect at the time of any such transfer or pledge), Federal Reserve Bank of New York Operating Circulars 21 and 21A and procedures that are followed generally for book- entry securities. If an Issue Supplement for a Series so provides, a Series or Class or Classes of Certificates may be issued in definitive or temporary form. Certificates issued in such form shall be subject to the provisions of the related Issue Supplement, including, without limitation, provisions regarding denominations, registration, transfer, exchange, and, if applicable, conversion to book-entry form. ARTICLE IV Servicing of Qualified Loans Section 4.01. General. Farmer Mac shall service the Qualified Loans comprising each Trust Fund, and shall have full power and authority to do or cause to be done any and all things in connection therewith as it may deem necessary or appropriate in its sole discretion; provided, however, that Farmer Mac shall have no authority to sell or hypothecate, or, subject to Section 4.03, make any substitution for any Qualified Loan. Farmer Mac in its discretion shall foreclose upon or otherwise comparably convert the ownership of the Mortgaged Property securing any Qualified Loan as to which a default occurs. To the extent consistent with then-current policies of Farmer Mac or customary practices in the agricultural real estate mortgage servicing industry, Farmer Mac in its discretion may enforce or waive enforcement of any of the terms of any Qualified Loan or enter into an agreement for the modification of any of the terms of any Qualified Loan (other than, except as may be required by terms of the Mortgage Note, a reduction in the Mortgage Interest Rate), or take any action or refrain from taking any action in servicing any Qualified Loan. In such connection, Farmer Mac may waive, except as may be provided in the related Issue Supplement, any Prepayment Premium, assumption fee or late payment charge. Although Farmer Mac will conduct such servicing through the facilities of Central Servicers pursuant to Servicing Contracts it shall not thereby be released from any of its duties or responsibilities hereunder or under the applicable Issue Supplement. Any Servicing Contract and any other transactions or services relating to the Qualified Loans involving a Central Servicer shall be deemed to be between the Central Servicer and Farmer Mac alone and the Trustee and Certificateholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to any Central Servicer. Section 4.02. Transfers of Mortgaged Property. In connection with the transfer, or prospective transfer, of title to a Mortgaged Property, Farmer Mac may, but shall not be required to, accelerate the maturity of the related Qualified Loan where such Qualified Loan contains a due-on-sale clause permitting acceleration under such a circumstance. In the event that, for any reason, Farmer Mac does not accelerate the maturity of a Qualified Loan upon the transfer, or prospective transfer of title to the underlying Mortgaged Property, Farmer Mac may enter into a transaction by which the obligor is released from liability on the related Qualified Loan and the transferee assumes such liability; provided, however, that no such transaction shall provide for reduction of the Mortgage Interest Rate or, to the extent adverse to the interests of Certificateholders, provide for a change in any interest rate adjustment provision or provision governing the calculation of scheduled payments. Section 4.03. Optional Purchase of Delinquent Qualified Loans or Mortgaged Property; Substitution or Repurchase of Defective Qualified Loans. Farmer Mac shall have the right and option, without obligation and in its discretion, to purchase from the related Trust Fund, upon payment of the Purchase Price, any Qualified Loan at any time after such Qualified Loan becomes and remains delinquent in the payment of any Installment Payment or portion thereof for a period of ninety days. Farmer Mac shall likewise have the right and option, without obligation and in its discretion, to purchase from the related Trust Fund, upon payment of the Purchase Price, any REO Property received in connection with the foreclosure or comparable conversion of any Qualified Loan. Farmer Mac may, in the case of a breach of warranty by a Seller of any Qualified Loan or a defect in documentation, (i) purchase, or cause the related Seller to purchase, at the Purchase Price such Qualified Loan from the Trust Fund or (ii) substitute, or cause the related Seller to substitute, an additional Qualified Loan or Qualified Loans for such Qualified Loan as long as any such substitution takes place within two years of the original issuance of Certificates evidencing beneficial interests in the related Trust Fund. Any Substitute Qualified Loan shall (i) have a Cut-Off Date Principal Balance which is not greater than the Scheduled Principal Balance of the replaced defective Qualified Loan (the amount of any difference being deemed to be a Curtailment), (ii) have an original final maturity not later than the original final maturity of any Qualified Loan in the Trust Fund and not earlier than two years prior to the original final maturity of the related replaced defective Qualified Loan, (iii) have a Mortgage Interest Rate which, on the date of substitution, is not less than the interest rate borne by the replaced defective Qualified Loan; (iv) have similar Due Dates as the replaced defective Qualified Loan; and (v) conform to such other criteria for Substitute Mortgage Loans as shall be set forth in the related Issue Supplement. In connection with any such substitution, Farmer Mac shall amend the Qualified Loan Schedule to reflect the withdrawal of the replaced defective Qualified Loan and the assignment to the Trustee of the Substitute Qualified Loan. If the Trustee's interest in a replaced defective Qualified Loan is evidenced by a Participation Certificate, the assignment to the Trustee of the Substitute Qualified Loan may be evidenced by a Participation Certificate. Section 4.04. Servicing Compensation; Payment of Certain Expenses by Farmer Mac. As compensation for its activities and obligations hereunder, Farmer Mac or any Central Servicer acting on its behalf shall be entitled to retain such amounts as shall be specified herein and in the related Issue Supplement. Farmer Mac shall pay the Trustee's fee and all other expenses incurred by it hereunder in connection with its servicing activities and shall, except for Liquidation Expenses and any such other reimbursable expenses as may be set forth in the related Issue Supplement, not be entitled to reimbursement therefor. Unless otherwise provided in the applicable Issue Supplement, additional servicing compensation in the form of Prepayment Premiums, assumption fees, late payment charges or otherwise shall be retained by Farmer Mac or, to the extent provided in the related Servicing Contract, by the related Central Servicer. Section 4.05. Collection of Certain Qualified Loan Payments; Collection Account. Farmer Mac shall require the Central Servicer in the related Servicing Contract to establish and maintain a Collection Account (which Collection Account may be the Collection Account for one or more Trust Funds) with an Eligible Depository in the name of the Trustee in which the Central Servicer shall deposit upon receipt on a daily basis, except as otherwise specifically provided herein or in the related Issue Supplement, the following payments and collections received by it subsequent to the Cut-Off Date (other than in respect of principal and interest on the Qualified Loans due on or before the Cut-Off Date): (i) All payments on account of principal on the Qualified Loans; (ii) All payments on account of interest on the Qualified Loans adjusted, in each case, to interest at the applicable Net Mortgage Rate; (iii) Net Liquidation Proceeds, REO Proceeds (net of any related expenses) and Insurance Proceeds (other than Insurance Proceeds to be applied to the restoration or repair of the related Mortgaged Property or released to the Borrower in accordance with the Central Servicer's normal servicing procedures) net of any amounts permitted to be withheld by the Central Servicer as servicing compensation pursuant to the Servicing Contract or permitted to be paid to the Central Servicer pursuant to such Servicing Contract; except that any such Advance made on the related Qualified Loan shall be deposited directly into the related Certificate Account on the Certificate Account Deposit Date in the month of the related Distribution Date; (iv) Any Advance by the Central Servicer pursuant to the related Servicing Contract; and (v) Any other amounts of the nature specified in the related Servicing Contract or Issue Supplement. The foregoing requirements for deposit in the Collection Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments on the Qualified Loans that are not part of the Trust Fund (including payments in respect of principal and interest on the Qualified Loans due on or before the Cut-Off Date) and, unless otherwise specified in the related Issue Supplement, payments or collections in the nature of Prepayment Premiums, late payment charges or assumption fees may but need not be deposited by the Central Servicer in the Collection Account. In the event the Central Servicer shall deposit in the Collection Account any amount not required to be deposited therein, it may at any time withdraw such amount from the Collection Account, any provision herein to the contrary notwithstanding. All amounts held in the Collection Account may be invested by the Central Servicer in Eligible Investments maturing prior to the applicable Certificate Account Deposit Date. Section 4.06. Permitted Withdrawals from the Collection Account. The Central Servicer may, from time to time as provided herein, make withdrawals from the Collection Account for the following purposes: (i) to reimburse itself for previously unreimbursed Advances, the Central Servicer's right to withdraw amounts pursuant to this clause (i) being limited to amounts received on particular Qualified Loans which represent late recoveries of Installment Payments respecting which any such Advance was made; (ii) to reimburse itself for any Nonrecoverable Advance, and to pay to itself or to any other person or entity designated in the related Servicing Contract any income from Eligible Investments in the Collection Account; (iii) to pay to Farmer Mac on or before each Certificate Account Deposit Date for deposit in the Certificate Account all amounts at the time held in the Collection Account other than amounts held therein which are in the nature of Amounts Held for Future Distribution; (iv) to pay to Farmer Mac on a daily basis any amounts held in the Collection Account which are allocable to a Certificate Distribution Amount and which were delinquent as of the related Certificate Account Deposit Date and were not represented by any related Advance; and (v) to withdraw such other amounts for such other purposes as shall be specified in the related Issue Supplement, Servicing Contract or Loan Sale Agreement. ARTICLE V Certificate Account; Distributions; Farmer Mac Guarantee Section 5.01. Certificate Account. On or before the issuance of a Series of Certificates, Farmer Mac shall either (i) open with an Eligible Depository one or more trust accounts in the name of the Trustee applicable to the related Trust Fund that shall collectively be the "Certificate Account" or (ii) in lieu of maintaining any such account or accounts, maintain the Certificate Account for the related Trust Fund by means of appropriate entries on its books and records designating all amounts credited thereto in respect of the related Qualified Loans as being held by it for the benefit of the Holders of Certificates evidencing beneficial ownership of such Trust Fund. To the extent that the Certificate Account for any Trust Fund is maintained by Farmer Mac in the manner provided in clause (ii) above, all references herein to deposits and withdrawals from the Certificate Account shall be deemed to refer to credits and debits to the related books of Farmer Mac. Farmer Mac shall deposit in the Certificate Account all amounts remitted to it by the Central Servicer representing withdrawals from the Collection Account pursuant to Section 4.05, together with the Purchase Price for each Qualified Loan or REO Property purchased pursuant to Section 4.03. Farmer Mac shall also deposit in the Certificate Account the amount of any Curtailments in connection with any Substitute Qualified Loans as described in Section 4.03. All amounts deposited by Farmer Mac from time to time in a Certificate Account for a Trust Fund, and all investments made with such moneys, including all income or other gain from such investments, shall be held by Farmer Mac in the Certificate Account as part of the Trust Fund as herein provided, subject to withdrawal by Farmer Mac for the purposes set forth in Section 5.03. All or a portion of amounts on deposit in a Certificate Account shall be invested and reinvested by Farmer Mac in one or more Eligible Investments bearing interest or sold at a discount. No such investment shall mature later than the Business Day immediately preceding the next applicable Distribution Date except that (i) if Farmer Mac shall have determined to make a special distribution on the related Series of Certificates pursuant to Section 5.06, no such Eligible Investment purchased subsequent to such determination shall mature subsequent to the Business Day next preceding such Special Distribution Date and (ii) any investment on which the Eligible Depository, in its commercial capacity, or Farmer Mac is the obligor, may mature on the related Distribution Date or Special Distribution Date, as the case may be. No Eligible Investment may be sold while in the Certificate Account except to the extent that (i) Farmer Mac believes that a sale of an Eligible Investment is desirable because of the possibility of a default by the obligor thereon or (ii) Farmer Mac has determined to make a special distribution on the related Series of Certificates and amounts will not be on deposit in the Certificate Account on the related Special Distribution Date sufficient to make the special distribution to be made thereon, in which case Eligible Investments may be sold in the smallest amount practicable to cure any such insufficiency. Section 5.02. Calculation of Certificate Distribution Amount; Publication of Certificate Principal Factors. On or before each Certificate Distribution Amount Determination Date for a Series, Farmer Mac shall calculate the Certificate Distribution Amount for the following Distribution Date. Immediately following each such calculation, Farmer Mac shall notify the Trustee in writing as to the amount so calculated and the allocation thereof as between principal and interest. As soon as practicable thereafter, Farmer Mac shall make available generally to financial publications on electronic services the Certificate Principal Factor (carried to eight decimal places) for each Class of Certificates after giving effect to the distribution of the Principal Distribution Amount on the following Distribution Date. Section 5.03. Withdrawals from the Certificate Account. Amounts on deposit in the Certificate Account on the Distribution Date for a Series shall be withdrawn by Farmer Mac, in the amounts required, to the extent funds are available therefor, for application as follows: first, towards the distribution to Certificateholders of the Certificate Distribution Amount for such Distribution Date; second, to the payment of any Guarantee Reimbursement Amount; third, to the payment of any portion of the Guarantee Fee for such Distribution Date or any prior Distribution Date which has not otherwise been paid; and fourth, to the payment to Farmer Mac of any amounts remaining in the Certificate Account after the withdrawals referred to in clauses first through third above, any such amounts being deemed to be payable to Farmer Mac as compensation for its servicing activities hereunder and to the reimbursement of expenses incurred by it in connection herewith. In addition, on any Special Distribution Date for a Series Farmer Mac shall withdraw from the related Certificate Account such amount as it shall have determined to distribute to Certificateholders on such Special Distribution Date. Section 5.04. Distributions on Certificates. On each Distribution Date for a Series, Farmer Mac shall withdraw from the Certificate Account for such Series, to the extent of funds available therefor, the Certificate Distribution Amount for such Distribution Date previously calculated by it pursuant to Section 5.02. In the event that the Certificate Distribution Amount may not be paid from amounts in the Certificate Account, Farmer Mac shall, pursuant to its guarantee obligations set forth in Section 5.05 hereof, provide from its own funds the amount of any insufficiency and shall distribute in Federal Funds to each Certificateholder of record on the preceding Record Date the amount distributable on such Certificateholder's Certificate(s) as determined pursuant to Section 3.01. Concurrently therewith, in the event the Certificate Account shall not be maintained with the Trustee, Farmer Mac shall furnish to the Trustee an Officer's Certificate (which may also relate to other Series comprised of Classes having a similar Distribution Date) to the effect that distribution of the Certificate Distribution Amount for such Series and Distribution Date has been made by it. As promptly as practicable following each Certificate Account Deposit Date, in the month of a Distribution Date, Farmer Mac shall, in the event the amount on deposit in the Certificate Account shall be less than the Certificate Distribution Amount for such following Distribution Date, provide to the Trustee an Officer's Certificate stating (i) the amount of such insufficiency, (ii) whether Farmer Mac is certain that funds will be available to it on such Distribution Date in an amount sufficient to cure such insufficiency without the necessity of borrowing from the United States Treasury and (iii) in the event that the response to (ii) is in the negative, attaching to such Officer's Certificate a copy of the certification furnished to the Secretary of the Treasury requesting that funds in the necessary amount be made available to Farmer Mac on or before such Distribution Date for purposes of satisfying its guarantee obligations in respect of the related Series of Certificates. Section 5.05. Farmer Mac Guarantee. Farmer Mac agrees to pay to the Holders of Certificates of each Series on each Distribution Date therefor the entire Certificate Distribution Amount for such Distribution Date irrespective of whether amounts on deposit in the related Certificate Account shall be sufficient therefor, any insufficiency being provided by Farmer Mac from its own funds whether internally generated, borrowed from the United States Treasury or otherwise available. Farmer Mac's obligations hereunder shall inure to the benefit of and shall be enforceable by any Holder of a Certificate through the Trustee (or individually by any such Holder in the event the Trustee shall have failed to make prompt demand upon Farmer Mac after due notification from any such Holder) if, for any reason beyond the control of such Holder, such Holder shall have failed to receive on any Distribution Date such Holder's interest in the Certificate Distribution Amount for such Distribution Date. Farmer Mac hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, legality or enforceability of, or any change in or amendment to, this Agreement, or any breach with respect to any Guarantee Fee payable to Farmer Mac in consideration of its guarantee, the absence of any action to enforce the same, the waiver or consent by the Holder of any Certificate or by the Trustee with respect to any provisions of this Agreement, or any action to enforce the same or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor. Farmer Mac hereby waives diligence, presentment, demand of payment, protest or notice with respect to each Certificate or the interest represented thereby, and all demands whatsoever, and covenants that this guarantee will not be discharged except upon complete irrevocable payment of the principal and interest obligations represented by the Certificates. Farmer Mac shall be subrogated to all rights of the Holders of Certificates of any Series against the related Trust Fund and the proceeds of the Trust Fund in respect of any amounts paid by Farmer Mac pursuant to the provisions of its guarantee; provided, however, that Farmer Mac's entitlement thereto on any Distribution Date shall be limited to the amount, if any, of any Guarantee Reimbursement Amount and shall be further subject to the priorities set forth in Section 5.03 hereof. No reference herein shall alter or impair the guarantee of Farmer Mac, which is absolute and unconditional, of the due and punctual distribution to Holders of Certificates of each Series on each Distribution Date of the Certificate Distribution Amount therefor. The Farmer Mac Guarantee is not an obligation of, and is not guaranteed as to principal or interest by the Farm Credit Administration, the United States or any other agency or instrumentality of the United States (other than Farmer Mac). Section 5.06. Special Distributions. To the extent specified in the Issue Supplement for a Series, Farmer Mac may elect to make, or, if so specified, shall be required to make under circumstances described in such Issue Supplement a special distribution with respect to such Series on a Special Distribution Date selected by it. All payments of principal pursuant to any special distribution shall be made in the same priority and manner as distributions of principal on any Distribution Date. Any such special distribution shall be made to the Holders of Certificates of the applicable Class or Classes as of the Special Record Date pertaining thereto and shall include accrued interest at the applicable Certificate Interest Rate or Certificate Interest Rates on the principal amount so distributed to the Special Distribution Date or to such earlier date as shall be specified in the related Issue Supplement. As soon as practicable after Farmer Mac has determined to make a special distribution as provided in this Section 5.06, Farmer Mac will make available generally to financial publications and electronic services notice of such special distribution which shall include the Special Record Date and Special Distribution Date applicable thereto, and the Certificate Principal Factor for each Class of such Series after giving effect to such special distribution on the related Special Distribution Date. ARTICLE VI Limitation of Liability Section 6.01. General Limitation. Farmer Mac and FMMSC shall be liable under the terms of the Certificates, this Trust Agreement and any related Issue Supplement only to the extent of faithful performance of the duties and responsibilities imposed by the terms of this Trust Agreement and any related Issue Supplement. Section 6.02. Measure of Liability. Neither Farmer Mac nor FMMSC nor any of their respective directors, officers, employees or agents shall be under any liability for any action taken or for refraining from the taking of any action in good faith pursuant to the terms of this Trust Agreement and any related Issue Supplement, or for errors in judgment; provided, however, that this provision shall not protect Farmer Mac or FMMSC or any such person against any liability for action or inaction by reason of willful misfeasance, bad faith or gross negligence, or by reason of willful disregard of obligations and duties. Neither Farmer Mac nor FMMSC shall have any obligation to appear in, prosecute or defend any legal action which is not incidental to their respective duties under this Trust Agreement and any related Issue Supplement and which in their opinion may involve either of them in expense or liability; provided, however, that either Farmer Mac or FMMSC in their discretion may undertake any such legal action which they may deem necessary or desirable in the interests of Holders of Certificates. In the event that either Farmer Mac or FMMSC in their discretion so determine to undertake any such legal action, the party taking such action for its own account shall pay and defray the expense of any such action, including attorneys' fees. Such expense resulting from any such legal action shall be reimbursable only to the extent amounts are available for withdrawals from the Certificate Account pursuant to clause fourth of Section 5.03. ARTICLE VII Farmer Mac Section 7.01. Resignation. Farmer Mac shall not resign from the duties imposed upon it by the terms of this Trust Agreement and any Issue Supplement. Section 7.02. Merger or Consolidation. Any corporation or other entity into which Farmer Mac is merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which Farmer Mac shall be a party, or any corporation or other entity succeeding to the business of Farmer Mac, shall succeed to and assume all duties imposed upon Farmer Mac by the terms of this Trust Agreement and all Issue Supplements, without the filing of any instrument or the performance of any further act by Farmer Mac or any Certificateholder. Farmer Mac promptly shall furnish written notice of such succession to all Certificateholders. Section 7.03. Succession Upon Default. With respect to any Trust Fund, each of the following events shall constitute an Event of Default by Farmer Mac: (a) any failure by Farmer Mac to distribute to Holders of Certificates of any Class in such Trust Fund any distribution required to be made under the terms of this Trust Agreement and the related Issue Supplement (including, for this purpose, pursuant to the Farmer Mac Guarantee) which continues unremedied for a period of five days after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac by the Trustee or to Farmer Mac and the Trustee by the Holders of Certificates of such Class having Certificate Principal Balances or Notional Principal Balances aggregating not less than 5% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class; or (b) failure on the part of Farmer Mac duly to observe or perform in any material respect any other of the covenants or agreements on the part of Farmer Mac in this Trust Agreement and the related Issue Supplement which continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac by the Trustee or to Farmer Mac and the Trustee by the Holders of Certificates of any Class in the related Trust Fund having Certificate Principal Balances or Notional Principal Balances aggregating not less than 25% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class; or (c) a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against Farmer Mac and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days; or (d) Farmer Mac shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings relating to Farmer Mac or to all or substantially all of its property; or (e) Farmer Mac shall admit in writing its inability to pay its debts generally as they become due, file a petition to invoke any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. With respect to any Trust Fund, upon the occurrence of an Event of Default, and so long as such Event of Default shall not have been remedied, the Trustee or the Holders of Certificates of any Class in the related Trust Fund having Certificate Principal Balances or Notional Principal Balances aggregating not less than 25% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class may (a) terminate all obligations and duties imposed upon Farmer Mac (other than its obligations under the Farmer Mac Guarantee pursuant to Section 5.05) under this Trust Agreement and the related Issue Supplement, and (b) name and appoint a successor or successors to succeed to and assume all of such obligations and duties. Such actions shall be effected by notice in writing to Farmer Mac and shall become effective upon receipt of such notice by Farmer Mac and the acceptance of such appointment by such successor or successors. On and after the receipt by Farmer Mac of such written notice and the acceptance by the successor or successors to Farmer Mac, all obligations (other than its continuing obligations under the Farmer Mac Guarantee) and duties imposed upon Farmer Mac under this Trust Agreement and the related Issue Supplement shall pass to and vest in the successor or successors named in the notice, and such successor or successors shall be authorized, and hereby are authorized, to take all such action and execute and deliver all such instruments and documents on behalf of Farmer Mac, as attorney in fact or otherwise, as may be necessary and appropriate to effect the purposes of such written notice. Section 7.04. Farmer Mac as Holder. Farmer Mac shall have the right to purchase and hold for its own account any Certificate issued pursuant to the terms of this Trust Agreement and any Issue Supplement, notwithstanding the rights and duties conferred and imposed upon Farmer Mac by this Trust Agreement and any such applicable Issue Supplement. In determining whether the Holders of the requisite amount of Certificates have given any request, demand, authorization, direction, notice, consent or waiver hereunder, any Certificate evidencing a beneficial ownership interest in the related Trust Fund held by Farmer Mac shall be disregarded and deemed not to be outstanding. ARTICLE VIII Concerning the Trustee Section 8.01. Duties of Trustee. (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Agreement. If an Event of Default occurs and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent investor would exercise or use under the circumstances in the conduct of such investor's own affairs. Any permissive right of the Trustee contained in this Agreement shall not be construed as a duty. (b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee which are specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform to the requirements of this Agreement. If any such instrument is found not to conform to the requirements of this Agreement in a material manner, the Trustee shall take action as it deems appropriate to have the instrument corrected and if the instrument is not corrected to the Trustee's satisfaction, the Trustee will provide notice thereof to the Certificateholders. (c) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own misconduct; provided, however, that: (i) Prior to the occurrence of an Event of Default, and after the curing of all such Events of Default that may have occurred, the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; (ii) 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 shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) The Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of Farmer Mac 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 this Agreement; and (iv) No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) For all purposes of this Agreement, the Trustee shall not be deemed to have knowledge of any Event of Default or event that, with notice or lapse of time, or both, would become an Event of Default, unless a Responsible Officer of the Trustee shall have received written notice thereof from the Central Servicer or Farmer Mac or a Responsible Officer of the Trustee shall have actual knowledge thereof, and in the absence of such written notice or knowledge no provision hereof requiring the taking of any action or the assumption of any duties or responsibility by the Trustee following the occurrence of any Event of Default or event which, with notice or lapse of time, or both, would become an Event of Default, shall be effective as to the Trustee. Section 8.02. Certain Matters Affecting the Trustee. (a) Except as otherwise provided in Section 8.01: (i) The Trustee may request and rely 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 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 (including counsel for Farmer Mac), and any Opinion of Counsel shall be full and complete authorization and protection 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 this Agreement or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders or Farmer Mac, pursuant to the provisions of this Agreement, unless such Certificateholders or Farmer Mac shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured), to exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in their exercise as a prudent investor would exercise or use under the circumstances in the conduct of such investor's own affairs; (iv) The Trustee shall not be personally liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement; (v) Prior to the occurrence of an Event of Default hereunder and after the curing of all Events of Default that may have occurred, 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 or document, unless requested in writing so to do by Farmer Mac or by the Holders of Certificates of the related series evidencing not less than 25% of the Aggregate Certificate Principal Balance (together with the total of all Class Notional Principal Balances if such Series includes one or more Interest Only Classes); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding. The reasonable expense of every such investigation shall be paid by Farmer Mac; and (vi) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys. (b) It is understood and agreed that, in exercising any right to direct the Trustee in the performance of its duties under this Agreement prior to the occurrence of an Event of Default and after the curing of all Events of Default, Farmer Mac shall be acting for the benefit of the Certificateholders of the related Series; provided, that nothing in this Agreement shall be construed to require Farmer Mac to exercise any such right or to impose any liability on Farmer Mac for its election, in its sole discretion, in any instance to exercise or to refrain from exercising any such right. No failure by Farmer Mac to exercise such right in any instance shall be deemed a waiver of such right in any other instance. The Trustee shall be entitled to rely on any such direction rendered to it by Farmer Mac without inquiry as to the propriety or validity thereof, and shall be protected in acting on such direction. Section 8.03. Trustee Not Liable for Certificates or Qualified Loans. Except as otherwise expressly provided herein, the Trustee shall not be accountable for the use or application by the Central Servicer or Farmer Mac of any funds paid to the Central Servicer or Farmer Mac, in respect of the Qualified Loans or deposited in or withdrawn from the Collection Account or the Certificate Account by the Central Servicer or Farmer Mac, as the case may be. The Trustee makes no representations or warranties as to the validity or sufficiency of the Certificates or of any Qualified Loan or related document, except that the Trustee represents that this Agreement has been duly authorized, executed and delivered by it and, assuming due execution and delivery by the other parties hereto, constitutes its valid and binding obligation, enforceable against it in accordance with its terms except that such enforceability may be subject to (i) applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally, and (ii) general principles of equity regardless of whether such enforcement is considered in a proceeding in equity or at law. Section 8.04. Trustee May Own Certificates. The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates of any series with the same rights it would have if it were not Trustee. Section 8.05. Indemnification of the Trustee. Each Trust Fund shall indemnify the Trustee its individual capacity and as Trustee and any director, officer, employee or agent of the Trustee in its individual capacity and as Trustee for, and hold them harmless against, any loss or liability incurred by any of them without negligence or bad faith on the part of the Trustee in its individual capacity and as Trustee or any such director, officer, employee or agent of the Trustee in its individual capacity and as Trustee and arising out of or in connection with the acceptance or administration of the trusts created herewith, including the costs and expenses of defending the Trustee in its individual capacity and as Trustee or any such director, officer, employee or agent of the Trustee in its individual capacity and as Trustee against any claim or liability incurred by any of them in connection with the exercise or performance of any of their powers or duties hereunder, but not including any expenses incurred in the ordinary course of performing the Trustee's duties as set forth herein. Section 8.06. Eligibility Requirements for Trustee. The Trustee hereunder shall at all times be a corporation having its principal office in a state and city acceptable to Farmer Mac and organized and doing business under the laws of such state or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authority. If such corporation 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 such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.07. Section 8.07. Resignation and Removal of the Trustee. (a) The Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to Farmer Mac. Upon receiving such notice of resignation, Farmer Mac shall promptly appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 90 days after giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. (b) If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 8.06 and shall fail to resign after written request therefor by Farmer Mac or if at any time the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then Farmer Mac may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee and Farmer Mac shall give written notice thereof to the Central Servicer. Notwithstanding the foregoing, any liability of the Trustee under this Agreement arising prior to such termination shall survive such termination. (c) Farmer Mac may at any time remove the Trustee solely pursuant to the Master Trustee Agreement and appoint a successor trustee by written instrument or instruments within 90 days of such predecessor Trustee's removal. If no successor trustee shall have been so appointed and have accepted appointment within 90 days after the giving of such notice of removal, the predecessor trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. (d) 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 8.08 but in no event shall become effective until a successor has been appointed and has accepted the duties of the Trustee. Section 8.08. Successor Trustee. (a) Any successor trustee appointed as provided in Section 8.07 shall execute, acknowledge and deliver to Farmer Mac and to its predecessor trustee an instrument accepting such appointment hereunder, and the successor trustee shall secure an Opinion of Counsel (which shall be an expense of such successor trustee) to the effect that, to the extent that the Trust Fund is exempt from Federal income taxation, the Trust Fund is not subject to state and local taxation in the jurisdiction where the successor trustee is located, whereupon 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 hereunder, with the like effect as if originally named as trustee herein. 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. (b) No successor trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.06. Section 8.09. Merger or Consolidation of Trustee. Any corporation into which the 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 the Trustee shall be a party, or any corporation succeeding to the business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be eligible under the provisions of Section 8.06, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.10. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions hereof, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing the same may at the time be located, Farmer Mac and the Trustee acting jointly shall have the power to execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the related Trust Fund, and to vest in such Person or Persons, in such capacity, such title to such Trust Fund, or any part thereof, and, subject to the other provisions of this Section 8.10, such powers, duties, obligations, rights and trusts as Farmer Mac and the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 8.06 hereunder. Except as specifically provided in the first sentence of this paragraph, the Trustee shall have no other rights to appoint a co-trustee. (b) In the case of any appointment of a co-trustee or separate trustee pursuant to this Section 8.10, all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Fund or any portion thereof in any such jurisdiction) shall be exercised and performed by such separate trustee or co-trustee at the direction of the Trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee and co-trustee shall refer to this Agreement and the conditions of this Article VIII. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee. (d) Any separate trustee and co-trustee may, at any time constitute the Trustee its agent or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in an be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Section 8.11. Controlling Provisions. In the event of any conflict between the provisions of the Master Trustee Agreement and this Agreement, the provisions of this Agreement shall be deemed controlling. Section 8.12. Trustee Fees. As compensation for its services hereunder, the Trustee shall be entitled to receive from Farmer Mac fees at such times, and in such amounts, as shall be specified for the related Trust Fund in the Master Trustee Agreement. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. ARTICLE IX Termination Section 9.01. Termination Upon Repurchase by Farmer Mac of All Qualified Loans. The respective obligations and responsibilities of Farmer Mac created hereby and by an Issue Supplement shall terminate as to the related Trust Fund upon the distribution by Farmer Mac to all Holders of Certificates evidencing beneficial ownership interests in such Trust Fund of all amounts required to be distributed hereunder and thereunder upon (i) the repurchase by Farmer Mac of all Qualified Loans and REO Property remaining in the related Trust Fund at a price computed in the manner specified in the related Issue Supplement, (ii) the final payment of the last Qualified Loan and/or REO Property remaining in the related Trust Fund; or (iii) distribution by Farmer Mac pursuant to the Farmer Mac Guarantee on the Final Distribution Date for the latest maturing Class of the Related Series of an amount sufficient to reduce the Class Certificate Principal Balance of such Class to zero; provided, however, that in no event shall any trust created hereby and by the related Issue Supplement continue beyond the expiration of 21 years from the death of the survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States of America to the Court of St. James', living on the Cut-Off Date of the related Series of Certificates. The right of Farmer Mac to repurchase all Qualified Loans and REO Property in a Trust Fund pursuant to (i) above shall be subject to such conditions as shall be set forth in the related Issue Supplement. Any such repurchase shall take place on a Distribution Date, and the proceeds of any such repurchase shall be distributed to Holders of Certificates on such Distribution Date in the respective proportions specified in the related Issue Supplement. In connection with any such termination, Farmer Mac shall make available to financial publications notice for the benefit of Holders of Certificates in the related Trust Fund to the effect that the final distribution will be made on the Distribution Date therein specified to Certificateholders of record on the applicable Record Date. ARTICLE X Supplemental Agreements Section 10.01. Permissible Without Action by Certificateholders. Farmer Mac, FMMSC and the Trustee, from time to time and at any time, may, without the consent of or notice (other than in the case of any instrument supplemental thereto pursuant to clause (b) below) to any Holder of a Certificate, enter into an agreement or other instrument supplemental hereto and which thereafter shall form a part hereof, for any one or more of the following purposes: (a) to add to the covenants of Farmer Mac, whether applicable to one or more Trust Funds; (b) to evidence the succession pursuant to Article VII of another Person or Persons to Farmer Mac and the assumption by such successor or successors of the obligations of Farmer Mac hereunder; (c) to eliminate any right reserved to or conferred upon Farmer Mac; (d) to take such action to cure any ambiguity or correct or supplement any provision in this Trust Agreement or in any Issue Supplement as Farmer Mac may deem necessary or desirable; or (e) to modify, eliminate or add to the provisions of this Trust Agreement and any related Issue Supplement to such extent as shall be necessary to maintain the tax exempt status of the Trust Fund under Federal and State law; provided that (i) there shall have been delivered to the Trustee an Opinion of Counsel to the effect that such action is necessary or advisable to maintain such status, and (ii) such amendment shall not have any of the effects described in paragraphs (a) and (b) of the proviso to Section 10.02. Section 10.02. Waivers and Supplemental Agreements With Consent of Holders. With the consent of the Holders of Certificates of each Class in the related Trust Fund having Certificate Principal Balances and Notional Principal Balances aggregating not less than 66% of the aggregate of the Certificate Principal Balances or Notional Principal Balances, as applicable, of all of the Certificates of such Class, (i) compliance by Farmer Mac with any of the terms of this Trust Agreement or the related Issue Supplement may be waived or (ii) Farmer Mac may enter into any Supplemental Agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Trust Agreement or the related Issue Supplement or of modifying in any manner the rights of the Holders of the Certificates issued under this Trust Agreement and the related Issue Supplement; provided that no such waiver or Supplemental Agreement shall: (a) without the consent of all Certificateholders affected thereby reduce in any manner the amount of, or delay the timing of, distributions which are required to be made on any Certificate; or (b) without the consent of all Certificateholders (i) terminate or modify the Farmer Mac Guarantee with respect to the Certificates of such Series, or (ii) reduce the aforesaid percentages of Certificates, the Holders of which are required to consent to any waiver or any Supplemental Agreement. It shall not be necessary for Holders to approve the particular form of any proposed Supplemental Agreement, but it shall be sufficient if such Holders shall approve the substance thereof. Promptly after the execution of any Supplemental Agreement pursuant to this Section, Farmer Mac shall give notice thereof to Holders of Certificates. Any failure of Farmer Mac to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Agreement. ARTICLE XI Miscellaneous Section 11.01. Holders. The death or incapacity of any Holder of a Certificate shall not operate to terminate this Trust Agreement or any Issue Supplement, nor entitle such Holder's legal representative or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the affairs of the related Trust Fund, nor otherwise affect the rights, duties and obligations of any of the parties to this Trust Agreement or any such Issue Supplement. No Holder shall have any right to control or to participate in the control and administration of any Trust Fund, nor shall any of the terms of this Trust Agreement or any such Issue Supplement be construed to constitute the Holders and Farmer Mac as partners or members of an association, nor shall any Holder have any duty or liability to any third person by reason of any action taken by the parties to this Trust Agreement or any such Issue Supplement pursuant to the provisions hereof and thereof. No Holder shall have any right by virtue of any provision of this Trust Agreement or any Issue Supplement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Trust Agreement or any Issue Supplement unless an Event of Default shall have occurred and be continuing in respect of the Trust Agreement and related Issue Supplement. For the protection and enforcement of the provisions of this Section, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Section 11.02. Reserve Banks as Agent. For each Certificate, the appropriate Reserve Bank shall be considered to be acting as the agent of Farmer Mac in providing to and conferring upon the owners of the Certificate, as such owners shall appear on the records of such Reserve Bank, the substantive rights and benefits which are provided for herein for Holders of Certificates. Accordingly, the substantive effect of all provisions herein providing rights and benefits to Holders of Certificates, including, without limitation, provisions relating to distributions, voting and notices, shall apply to such record owners on the books of the Reserve Bank, through the appropriate Reserve Bank acting as agent for Farmer Mac. Section 11.03. Governing Law. The terms of this Trust Agreement and any Issue Supplement shall be construed in accordance with the laws of the District of Columbia. Section 11.04. Demands, Notices, Communications. All formal demands, notices and communications by and between Farmer Mac, the Trustee and the Holder of any Certificate shall be in writing and delivered in person or by first class mail, postage prepaid (a) if to Farmer Mac or the Depositor, to 919 18th Street, N.W., Washington, D.C. 20006, or to such other address as shall be set forth in a notification to Holders, or (b) if to the Trustee to First Trust Center, 180 East Fifth Street, St. Paul, MN 55101; Attention: Vice President-Structured Finance or (c) if to the Holder of a Certificate, to the appropriate Holder in care of the Reserve Bank at the address provided to Farmer Mac by such Reserve Bank. Any notice so mailed within the time prescribed in this Trust Agreement or any Issue Supplement shall be conclusively presumed to have been duly given whether or not the Holder receives such notice. Section 11.05. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Trust Agreement or any Issue Supplement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Trust Agreement or any Issue Supplement and shall in no way affect the validity or enforceability of the other provisions of this Trust Agreement or any Issue Supplement or of the Certificates or the rights of the Holders thereof. IN WITNESS WHEREOF, the parties hereto hereby execute this Trust Agreement, as of the day and year first above written. FEDERAL AGRICULTURAL MORTGAGE CORPORATION SEAL] By____________________________ Attest:__________________________ FARMER MAC MORTGAGE SECURITIES CORPORATION [SEAL] By____________________________ Attest:_______________________ FIRST TRUST NATIONAL ASSOCIATION, as Trustee [SEAL] By____________________________ Attest:_______________________ EX-5 6 EXHIBIT 4.3 PROPOSED FORM OF TRUST AGREEMENT-REMIC TRUSTS FEDERAL AGRICULTURAL MORTGAGE CORPORATION GUARANTEED REMIC AGRICULTURAL MORTGAGE-BACKED SECURITIES PROGRAM FORM OF TRUST AGREEMENT THIS TRUST AGREEMENT made, executed and published as of the first day of June 1996, at Washington, D.C., among the Federal Agricultural Mortgage Corporation (herein called "Farmer Mac"), a federally chartered instrumentality of the United States, Farmer Mac Mortgage Securities Corporation (herein called "FMMSC"), a corporation organized and existing under the laws of the State of Delaware, and First Trust National Association, a national banking association (the "Trustee"); W I T N E S S E T H WHEREAS, Farmer Mac is authorized pursuant to Title VIII of the Farm Credit Act of 1971, as amended (the "Act"), to guarantee the timely payment of principal and interest in respect of securities evidencing undivided beneficial interests in trust funds comprised of agricultural mortgage loans conforming to the Act ("Qualified Loans"); WHEREAS, FMMSC has purchased and intends to purchase Qualified Loans; WHEREAS, FMMSC intends to assemble groups of such Qualified Loans and to transfer and assign the same to the Trustee in exchange for multiple classes of securities evidencing beneficial ownership interests in the Qualified Loans in the related trust fund or trust funds (each a "Trust Fund"); WHEREAS, Farmer Mac and FMMCS, by the execution and delivery of an Issue Supplement hereto, will have elected to treat each Trust Fund created hereby and thereby as a "real estate mortgage investment conduit" ("REMIC") within the meaning of Section 860D of the Internal Revenue Code of 1986; and WHEREAS, Farmer Mac intends to service the Qualified Loans held in each such Trust Fund and, pursuant to the Act, to guarantee to the holders of securities evidencing undivided beneficial interests in each such Trust Fund the timely distribution of all amounts of principal and interest required to be distributed thereon; NOW, THEREFORE, the parties to this Trust Agreement, in the several capacities hereinabove set forth, do hereby declare and establish this Trust Agreement and do hereby undertake and otherwise agree as follows: ARTICLE I Defined Terms Section 1.01. General Definitions. Whenever used in this Trust Agreement, the following words and phrases shall have the following meanings: Act: Title VIII of the Farm Credit Act of 1971, as amended (12 U.S.C. 2279aa). Advance: As to any Distribution Date and Trust Fund, any amount advanced with respect to such Distribution Date by the related Central Servicer or Central Servicers as required by the applicable Servicing Contract. Agreement: With respect to any Series, the collective provisions of this Trust Agreement and the related Issue Supplement. Aggregate Certificate Principal Balance: The aggregate of the Certificate Principal Balances of all Certificates of a Series as of the date of determination. Amounts Held for Future Distribution: With respect to any Series and Distribution Date, the total of all amounts held in the Collection Account on the preceding Certificate Account Deposit Date on account of (i) Principal Prepayments, Liquidation Proceeds and REO Proceeds received subsequent to the preceding Prepayment Period, (ii) Installment Payments due subsequent to the preceding Due Date and (iii) if such Series is comprised of two or more Classes having different Distribution Dates, all proceeds of the related Qualified Loans for the Class or Classes as to which such Distribution Date is not a Distribution Date. Appraisal Standards: With respect to any Series, the updated appraisal/reappraisal standards at the time of the related Issue Supplement acceptable to Farmer Mac. Appraised Value: The appraised value of a Mortgaged Property, which is the appraised value based upon the appraisal conducted in accordance with the Appraisal Standards. Authorized Officer: The Chairman of the Board, the President or any Vice President of Farmer Mac or FMMSC, as the context requires. Authorized Signatory: With respect to any Residual Certificate, any individual authorized to execute or authenticate the same on behalf of the Trustee in its capacity as trustee or, in the case of authentication, in its capacity as Certificate Registrar. Balloon Payment: With respect to any Qualified Loan that provides for the principal portion of the Installment Payments due thereon based on an amortization schedule more than one year longer than the remaining term to stated maturity of such Qualified Loan, the principal amount due on the stated maturity date of such Qualified Loan. Balloon Qualified Loan: Any Qualified Loan having a Balloon Payment. Borrower: With respect to any Qualified Loan, the obligor or obligors thereon. Business Day: Any day other than (i) a Saturday or a Sunday, (ii) a day on which the Federal Reserve Bank of New York authorizes banking institutions in the Second Federal Reserve District to be closed, (iii) a day on which banking institutions in the State of Minnesota or New York are required or authorized by law to be closed or (iv) a day on which the offices of Farmer Mac are closed. Central Servicer: With respect to any Trust Fund, the Person or Persons which shall at the time be directly servicing the Qualified Loans included therein pursuant to a Servicing Contract. Central Servicer Fee Rate: With respect to any Qualified Loan, a percentage per annum rate (inclusive of any sub-servicer fee rate) specified in or calculated as described in the related Issue Supplement. Certificate: A Guaranteed REMIC Agricultural Mortgage- Backed Security, in the case of all Certificates other than Residual Certificate, issued in book-entry form and maintained in the name of a record owner as an entry on the books of a Reserve Bank under a designation specifying the Series, Class and denomination thereof; and in the case of a Residual Certificate, issued in fully registered certificated form as provided in Article II hereof. Certificate Account: As to any Series, the account created and maintained pursuant to Section 5.01. Certificate Account Deposit Date: With respect to a Series, the fifteenth day of each month (or if such fifteenth day is not a Business Day, the Business Day next succeeding such fifteenth day) beginning with the month following the month of the Cut-Off Date. Certificate Distribution Amount: With respect to a particular Series and Distribution Date, the sum of (a) all interest accrued on the then outstanding Certificates for the Interest Accrual Period immediately preceding such Distribution Date (other than interest accrued on any Class as to which such date is not a Distribution Date); (b) the Principal Distribution Amount for such Distribution Date; and (c) to the extent specified in the related Issue Supplement, all Prepayment Premiums collected (as opposed to due) during the preceding Prepayment Period. Certificate Distribution Amount Determination Date: With respect to a Series and Distribution Date, a date on or before the fifth Business Day during the month of such Distribution Date. Certificate Interest Rate: With respect to any Class, the annual rate at which interest accrues on the Certificates of such Class, as specified or described in the related Issue Supplement. Certificate Principal Balance: As to any Certificate (other than an Interest Only Certificate) prior to the initial Distribution Date for the related Trust Fund, the denomination thereof and, as to any Certificate subsequent to such initial Distribution Date, the denomination thereof multiplied by the applicable Certificate Principal Factor. Certificate Principal Factor: As of any date of determination and as to any Class of Certificates (other than an Interest Only Class), a fraction the numerator of which is (i) the aggregate of the denominations of all Certificates of such Class less (ii) the aggregate amount of all Principal Distribution Amounts, if any, allocable thereto prior to such date of determination and the denominator of which is the aggregate of the denominations of all Certificates of such Class. As to any Interest Only Class, a fraction calculated in the manner described in the related Issue Supplement. Certificateholder or Holder: As to any Regular Certificate, the record owner on the appropriate Reserve Bank's books. As to any Residual Certificate, the registered owner in the Certificate Register maintained by the Certificate Registrar pursuant to Section 3.03 hereto. Certificate Registrar: With respect to any Series, the entity acting as certificate registrar and transfer agent pursuant to Section 3.03 unless otherwise specified in an Issue Supplement. The Certificate Registrar for the related Series shall be the Trustee. Class: With respect to any Series, all Certificates of such Series with the same terms. Class Certificate Principal Balance: With respect to any Class at any time, the aggregate of the Certificate Principal Balances of all Certificates of such Class. Class Notional Principal Balance: With respect to any Interest Only Class at any time, the aggregate of the Notional Principal Balance of all Certificates of such Class. Closing Date: As to any Series, the date specified in the related Issue Supplement. Code: The Internal Revenue Code of 1986, including any successor or amendatory provisions. Collection Account: As to any Series, the account created and maintained pursuant to Section 4.05. Corporate Trust Officer: The principal office of the Trustee, at which of any particular time its corporate trust business shall be administered, which office at the date of the execution of this Trust Agreement is __________________. Curtailment: Either (i) any Principal Prepayment made by a Borrower that is not a Principal Prepayment in Full, (ii) any amount deemed to be such in connection with a substitution pursuant to Section 4.03, (iii) any REO Principal Amortization Amount or (iv) any Insurance Proceeds or other recoveries that are not Liquidation Proceeds and were applied to reduce the principal balance of the related Qualified Loan. Custodial Agreement: The agreement dated of even date herewith between the Trustee, as custodian, and Farmer Mac, pursuant to which the Trustee acts as custodian for the Required Documents on behalf of the related Trust Fund. Cut-Off Date: As to any Series, the first day of the month during which Certificates of such Series are initially issued. Cut-Off Date Principal Balance: With respect to any Qualified Loan, the unpaid principal balance thereof at the Cut- Off Date after giving effect to all amounts payable on or prior thereto, whether or not paid. With respect to any Substitute Qualified Loan the unpaid principal balance thereof at the date of substitution thereof after giving effect to all amounts payable on or prior thereto, whether or not paid. Disqualified Organization: A disqualified organization as defined in Section 860E(e)5 of the Code. Distribution Date: As to any Class, the 25th day (or if such 25th day is not a Business Day, the Business Day immediately following) of each month specified in the related Issue Supplement as a month for a Distribution Date for the Certificates of such Class. Due Date: With respect to any Qualified Loan, each date upon which an installment of interest and principal, if any, is due in accordance with the amortization schedule initially applicable thereto. Due Period: With respect to any Class and Distribution Date, the period beginning immediately following the preceding Due Period (or immediately following the Cut-Off Date in the case of the initial Distribution Date) and ending on and including the Due Date in the month of such Distribution Date. Eligible Depository: Any Reserve Bank, the Trustee or any other depository institution or trust company approved in writing by an Authorized Officer of Farmer Mac incorporated under the laws of the United States of America or any state thereof and subject to supervision and examination by federal or state banking authorities. Eligible Investments: Any one or more of the following obligations or securities: (i) direct obligations of, and obligations fully guaranteed by, the United States of America, Farmer Mac, or any other agency or instrumentality of the United States of America; (ii) as to any Collection Account, any other obligation or security specified in the related Servicing Contract; and (iii) as to any Series, any other obligation or security specified in the related Issue Supplement. Event of Default: An event as described in Section 7.03. Farmer Mac: Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States, or its successor in interest or any successor appointed as herein provided. Farmer Mac Guarantee: With respect to any Series, the guarantee obligations of Farmer Mac with respect to the Certificates of such Series pursuant to Section 5.05 hereof. Final Distribution Date: As to any Class, the Distribution Date specified in the related Issue Supplement as being the Distribution Date on or before which the Certificate Principal Balance or, in the case of an Interest Only Class, Notional Principal Balance of each Certificate within such Class shall have been reduced to zero. FMMSC: Farmer Mac Mortgage Securities Corporation, a corporation organized and existing under the laws of the State of Delaware, or its successor in interest. Guarantee Fee: With respect to any Series, the fee payable to Farmer Mac pursuant to Section 5.03 and calculated in the manner described in the related Issue Supplement. Guarantee Reimbursement Amount: With respect to any Trust Fund, the excess, if any of amounts paid by Farmer Mac pursuant to Section 5.05 to Holders of Certificates evidencing beneficial interests therein, over amounts received by Farmer Mac (other than Guarantee Fees or other fees or expenses otherwise payable to it) in reimbursement therefor. Holders: With respect to any Trust Fund, all of the Holders of Certificates evidencing beneficial ownership interests therein. Installment Payment: As to any Qualified Loan (including any REO Qualified Loan) and any Due Date, the payment of principal and/or interest due thereon in accordance with the amortization schedule provided at the time applicable thereto (after adjustment, if any, for any Curtailments occurring prior to such Due Date but before any other adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period). Interest Accrual Period: With respect to any Class and Distribution Date, the period prior thereto specified in the related Issue Supplement. Interest Only Certificate: Any Certificate evidencing all or part of an Interest Only Class. Interest Only Class: Any Class identified as such in the related Issue Supplement. Issue Supplement: An instrument executed by the parties hereto pursuant to Section 2.01 which supplements this Trust Agreement and identifies and establishes, among other things, a particular Trust Fund and a particular Series of Certificates related to such Trust Fund. Liquidated Qualified Loan: Any defaulted Qualified Loan as to which Farmer Mac has determined that all amounts it expects to recover from or on account of such Qualified Loan have been recovered, provided, however, that a defaulted Balloon Qualified Loan shall be deemed to be a Liquidated Qualified Loan in the absence of any such determination on the second anniversary of the Due Date for the related Balloon Payment. Liquidation Expenses: Expenses incurred by or on behalf of Farmer Mac in connection with the liquidation of any defaulted Qualified Loan, including, without limitation, legal fees and expenses, brokerage commissions paid to third parties, any premiums for hazard insurance policies maintained with respect to any related REO Property, any fees to third parties hired to issue environment reports with respect to or to manage any related REO Property and any related and unreimbursed expenditures for real estate and conveyance taxes or for property restoration or preservation. Liquidation Proceeds: Cash received in connection with the liquidation of defaulted Qualified Loans and REO Qualified Loans, whether through trustee's sale, foreclosure sale or otherwise. Loan Sale Agreement: The agreement between a Seller and Farmer Mac pursuant to which the Seller conveys Qualified Loans to FMMSC and makes certain representations and warranties to Farmer Mac, FMMSC, as Farmer Mac's designee, and their respective successors and assigns. Master Trustee Agreement: The agreement, as the same may be amended from time to time, between Farmer Mac and the Trustee. Mortgage Rate: As to any Qualified Loan, the per annum rate of interest borne thereby. Net Liquidation Proceeds: With respect to any Liquidated Qualified Loan, Liquidation Proceeds net of Liquidation Expenses not previously reimbursed out of REO Proceeds or otherwise. Net Mortgage Rate: As to any Qualified Loan, the Mortgage Rate borne thereby net of the Central Servicer Fee Rate. Opinion of Counsel: A written opinion of counsel, who may be counsel for Farmer Mac. Officer's Certificate: A certificate signed by an Authorized Officer of Farmer Mac or FMSSC, as the context requires. Nonrecoverable Advance: Any portion of an Advance previously made or proposed to be made in respect of a Qualified Loan which has not been previously reimbursed to the Central Servicer and which, in the good faith judgment of the Central Servicer, will not or, in the case of a proposed Advance, would not be ultimately recoverable from future Borrower payments or from Net Liquidation Proceeds, REO Proceeds or other recoveries in respect of the related Qualified Loan. The determination by the Central Servicer that it has made a Nonrecoverable Advance or that any proposed advance, if made, would constitute a Nonrecoverable Advance shall be evidenced by a written notification by the Central Servicer delivered to the Trustee, with a copy to Farmer Mac, stating (i) the amount of such Nonrecoverable Advance and (ii) that the Central Servicer has determined in good faith that such advance is or would be a Nonrecoverable Advance in accordance with the terms hereof. Non-United States Person: Any person that is not a United States Person. Notional Principal Balance: As to any Interest Only Certificate prior to the initial Distribution Date therefor, the denomination thereof, and as to any Interest Only Certificate subsequent to such initial Distribution Date, the denomination thereof multiplied by the then applicable Certificate Principal Factor. Participation Certificate: An instrument evidencing an interest in one or more Qualified Loans. Permitted Transferee: Any Transferee of a Residual Certificate, other than a Disqualified Organization or Non-United States Person. Person: Any legal person, including any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Prepayment Period: With respect to any Class and Distribution Date, the period beginning immediately following the preceding Prepayment Period (or immediately following the calendar month next preceding the Cut-Off Date in the case of the initial Distribution Date) and ending on the last day of the calendar month next preceding the month of such Distribution Date. Prepayment Premium: With respect to any Qualified Loan, any premium or yield maintenance payment paid or payable, as the context requires, by the related Borrower in connection with any Principal Prepayment. Principal Distribution Amount: With respect to a particular Class and Distribution Date, the sum of (a) all Curtailments received with respect to the Related Qualified Loans during the previous Prepayment Period; (b) the Scheduled Principal Balance of each Related Qualified Loan which was the subject of a Principal Prepayment in Full during the preceding Prepayment Period or which became a Liquidated Qualified Loan during such preceding Prepayment Period; (c) the principal component of each Installment Payment due in respect of each Related Qualified Loan during the preceding Due Period (other than any Balloon Payment); and (d) if such Distribution Date is a Final Distribution Date for a Class, any amount by which the Class Certificate Principal Balance therefor would be greater than zero after distribution in accordance with the applicable priorities of the amounts specified in (a) - (c) above. With respect to a particular Special Distribution Date, the amount allocable to principal which is distributed by Farmer Mac under the circumstances and subject to the conditions set forth in Section 5.06 and the related Issue Supplement. Principal Prepayment: Any payment or other recovery of principal on a Qualified Loan that is received in advance of its scheduled Due Date and is not accompanied by an amount as to interest representing scheduled interest due on any date or dates in any period subsequent to the Prepayment Period in which such prepayment occurs. Principal Prepayment in Full: Any payment received on a Qualified Loan that is in excess of the installment of principal and interest due thereon in an amount sufficient to pay the entire principal balance of such Qualified Loan. Purchase Price: As to any Qualified Loan, the unpaid principal balance thereof together with accrued and unpaid interest thereon at the Net Mortgage Rate to the Due Date next preceding the Distribution Date upon which the net proceeds of such Purchase Price are to be distributed to Certificateholders. Qualified Loan: With respect to any Trust Fund, any mortgage loan included therein. Qualified Loan Schedule: With respect to any Trust Fund, the loan file set-up portion of the Farmer Mac tape specifications attached as Schedule I hereto. Record Date: As to any Distribution Date, the last day of the month next preceding the month of such Distribution Date. Regular Certificate: Any Certificate other than a Residual Certificate. Related Qualified Loan: With respect to any Class included in a Series comprised of two or more Classes, any Qualified Loan identified in the related Qualified Loan Schedule as pertaining to such Class. REMIC Administrator: With respect to a Trust Fund, the entity identified as such in the related Issue Supplement. REMIC: A "real estate mortgage investment conduit" within the meaning of Section 860D of the Code. REMIC Provisions: Provisions of the federal income tax law relating to real estate mortgage investment conduits, which appear at Sections 860A through 860G of Subchapter M of Chapter 1 of the Code, and related provisions, and temporary and final regulations (or, to the extent not inconsistent with such temporary of final regulations, proposed regulations) and published rulings, notices and announcements promulgated thereunder, as the foregoing may be in effect from time to time. REO Principal Amortization Amount: With respect to any REO Qualified Loan and Prepayment Period, any amount, as determined by Farmer Mac, by which aggregate related REO Proceeds received during a Prepayment Period are in excess of interest that would have accrued during such period on the related REO Qualified Loan and expenses payable in respect of such REO Property during such Prepayment Period. REO Proceeds: Proceeds, other than Liquidation Proceeds, received in respect of any REO Qualified Loan (including, without limitation, proceeds from the rental of the related Mortgaged Property). REO Property: Any Mortgaged Property that has been acquired by a Trust Fund by foreclosure, deed-in-lieu of foreclosure or otherwise. REO Qualified Loan: Any Qualified Loan (whether or not the related indebtedness has been extinguished) that is not a Liquidated Qualified Loan and as to which the related Mortgaged Property is held as part of the Trust Fund. Required Documents: As to each Qualified Loan (other than a Qualified Loan represented by a Participation Certificate) the documents specified in Section 2.05. Reserve Bank: Any Federal Reserve Bank, including its branches. Responsible Officer: When used with respect to the Trustee, any officer of the Trustee, including any Chairman or any President, any Vice President, any Assistant Vice President, any Assistant Treasurer, any Trust Officer, any Assistant Secretary or any other officer of the Trustee customarily performing functions similar to those performed by the persons who at the time shall be such officers and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. Residual Certificate: The Certificate or Certificates comprising the Class designated in the related Issue Supplement as the sole "residual interest" in the Trust Fund for purposes of the REMIC Provisions. Scheduled Principal Balance: As to any Qualified Loan and any Distribution Date, the principal balance of such Qualified Loan as of the beginning of the related Due Period, as specified in the amortization schedule at the time relating thereto (after adjustment, if any, for Curtailments occurring prior to the related Prepayment Period but before any other adjustment to such amortization schedule by reason of any bankruptcy or similar proceeding or any moratorium or similar waiver or grace period), after giving effect to the payment of principal due prior to such Due Period whether or not received from the related Borrower (other than any Balloon Payment). Seller: Any entity that sold Qualified Loans to FMMSC and that is identified as a Seller in the Qualified Loan Schedule. Series: A separate series of Certificates issued pursuant to this Agreement and the related Issue Supplement. Servicing Contract: The agreement between Farmer Mac and any Central Servicer relating to the direct servicing by such Central Servicer of Qualified Loans for a particular Trust Fund. Special Distribution Date: Any date on which Farmer Mac elects or is required to make a distribution under the circumstances and subject to the conditions set forth in Section 5.06 and the related Issue Supplement, any such date for a Series being the 25th day (or if such 25th day is not a Business Day, the Business Day immediately following) of any month (other than any month in which a Distribution Date for the related Class occurs). Special Record Date: As to any Special Distribution Date, the date as of which Certificateholders entitled to a special distribution are determined, any such date being the last day of the month next preceding the month of such Special Distribution Date. Substitute Qualified Loan: Any loan substituted for a defective Qualified Loan pursuant to Section 4.03. Transfer Agent: With respect to any Series, the entity acting as Certificate Registrar under the related Agreement. Tax Returns: The federal income tax return on Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed on behalf of a Trust Fund due to its classification as a REMIC under the REMIC Provisions, together with any and all other information, reports or returns that may be required to be furnished to the Certificateholders or filed with the Internal Revenue Service or any other governmental taxing authority under any applicable provisions of federal, state or local tax laws. Trust Agreement: This Trust Agreement, dated as of June 1, 1996, by and among the Trustee, Farmer Mac and FMMSC, as the same is originally executed, or as modified, amended or supplemented in accordance with the applicable provisions hereof. Trust Fund: As to any particular Series of Certificates, the corpus of the trust created by this Trust Agreement and the Issue Supplement applicable thereto, consisting of (a) the Qualified Loans and all proceeds thereof, (b) the Collection Account, the Certificate Account and all cash and investments held therein and (c) the Farmer Mac Guarantee applicable to the related Certificates pursuant to Section 5.05. Trustee: First Trust National Association, a national banking association, or its successor in interest in such capacity, or any successor trustee appointed as herein provided. United States Person: A citizen or resident of the United States, a corporation, partnership or other entity created or organized in, or under the laws of, the United States or any political subdivision thereof, or an estate or trust whose income is includible in gross income for United States federal income tax purposes regardless of its connection with the conduct of a trade or business within the United States. ARTICLE II Applicable Documentation; Conveying of Qualified Loans Section 2.01. Issue Supplement. An Issue Supplement establishing a Trust Fund and creating the Certificates evidencing beneficial ownership interests therein shall be executed by the Trustee, Farmer Mac and FMSSC. Each Issue Supplement shall identify and relate to a particular Series of Certificates evidencing beneficial ownership interests in the related Trust Fund. Farmer Mac shall prepare and maintain for each such Trust Fund a Qualified Loan Schedule conforming, except as set forth in such Issue Supplement, to the definition thereof in Article I hereof. Section 2.02. Issue Supplement and Trust Agreement. With respect to each Trust Fund established by an Issue Supplement and the related Certificates, the collective terms of this Trust Agreement and such Issue Supplement shall govern the issuance and administration of all Certificates related to such Trust Fund, and all matters related thereto, and shall have no applicability to any other Trust Fund or Certificates. As applied to each Trust Fund established by an Issue Supplement, and the related Certificates, the collective terms of such instruments shall constitute an agreement relating exclusively to such Trust Fund and Certificates to like effect as if the collective terms of all such instruments were set forth in a separate instrument, duly executed and delivered by the respective signatories to this Trust Agreement. Section 2.03. Authorized Officers. The manual or facsimile signature of any individual appearing on an Issue Supplement, designated as the signature of an Authorized Officer of Farmer Mac or FMSSC, shall constitute conclusive evidence that such individual is, in fact, authorized by Farmer Mac or FMSSC, as the case may be, to execute such Issue Supplement, notwithstanding that such authorization may have lapsed prior to the effective date of such Issue Supplement. Section 2.04. Delivery of Instruments. The Trustee shall furnish to each Certificateholder, upon request, copies of this Trust Agreement and the related Issue Supplement, without attachments, applicable to the Certificate or Certificates held by such Holder. Section 2.05. Conveyance of Qualified Loans. (a) Concurrently with the execution and delivery of an Issue Supplement, FMMSC shall transfer, assign, set over and otherwise convey to the Trustee, on behalf of Holders of Certificates evidencing beneficial interests therein, all of FMMSC's right, title and interest in and to the Qualified Loans identified in the attached Qualified Loan Schedule, including all payments of principal and interest thereon received after the respective date or dates on which the Cut-Off Date Principal Balance was determined (other than payments permitted to be retained by FMMSC by the terms hereof, including payments of principal and interest due on or before the Cut-Off Date). In connection with any such conveyance, Farmer Mac shall be deemed to have assigned to the Trustee for the benefit of Certificateholders all of Farmer Mac's rights under each applicable Loan Sale Agreement, including, but not limited to, the right to enforce the representations and warranties therein against the related Seller. (b) In connection with any such transfer (other than pursuant to a Participation Certificate) of a Qualified Loan, FMMSC shall cause to be delivered to the Trustee: (i) The related Mortgage Note endorsed to the order of "First Trust National Association, as Custodian/Trustee" by the Seller thereof, together with such other related documents as shall be specified in the Custodial Agreement. In the case of Qualified Loans evidenced by a Participation Certificate, FMMSC shall denote on the face of such Participation Certificate that it has been assigned to the Trustee for the exclusive benefit of Holders of Certificates evidencing beneficial interests in the related Trust Fund; (ii) The Mortgage with evidence of recording indicated thereon or, if (x) the public recording office retains the original of the Mortgage or (y) the Trustee receives a certificate executed by two officers of the Seller certifying that the original of the Mortgage is lost, missing or destroyed, a copy of the Mortgage certified by the public recording office in which such Mortgage has been recorded to be a true and complete copy of the original Mortgage; (iii) A copy of the original assignment in the form "First Trust National Association, as Custodian/Trustee" which assignment or equivalent instrument may be in the form of one or more blanket assignments covering Mortgages secured by Mortgaged Properties located in the same county, if permitted by law and accompanied by an Opinion of Counsel to that effect (a copy of such blanket assignment to be delivered in each applicable loan file) and any intervening assignments in original recorded form evidencing an unbroken chain of assignments from the initial assignor to the Trustee. If the assignment is not complete due to the lack of necessary recording information for insertion in the assignment as of the applicable Closing Date, the original assignment will be retained by FMMSC until such time as the necessary information becomes available, at which time FMMSC shall promptly complete, or cause the Seller to complete, the Assignment and forward, or cause the Seller to forward, it to the appropriate office for recordation. Upon completion of recordation, FMMSC will forward the original documents (or cause the original documents to be forwarded) to the Trustee; (iv) Evidence of title to the Mortgaged Property (either in the form of an original opinion from an attorney or firm of attorneys or an original or certified copy of a lender's title insurance policy or binding title insurance commitment issued by a title insurance company); and (v) Either (1) the original of each modification agreement and each assumption agreement, if any, relating to such Qualified Loan or, if (x) the public recording office retains the original of the modification or assumption agreement or (y) the Trustee receives a certificate executed by two officers of the Seller certifying that the original of the modification or assumption agreement is lost, missing or destroyed, a copy of the modification (with respect to the Mortgage) or assumption agreement certified by the public recording office in which such Mortgage was recorded to be a true and complete copy of the original modification or assumption agreement, or (2) a signed statement of the Seller that there is no modification agreement or assumption agreement relating to such Qualified Loan (such statement may be part of a list of Qualified Loans as to which no modification agreement or assumption agreement exists). Section 2.06. Review and Certification of Required Documents and Safekeeping of Documents. The Trustee shall review the completeness of the Required Documents, certify as to such review as provided in the Custodial Agreement and otherwise conform to the applicable provisions of the Custodial Agreement. ARTICLE III Regular Certificates; Residual Certificates Section 3.01. Certificates Issuable in Series and Classes; General Provisions with Respect to Principal and Interest Distributions. Each Series of Certificates shall be divided into two or more Classes and shall be designated generally as Guaranteed REMIC Agricultural Mortgage-Backed Securities, with such particular designations added or incorporated in such title for the Certificates of any particular Series or Class as shall be specified in the related Issue Supplement. One Class of each such Series shall be designated in the applicable Issue Supplement as the "Residual Interest" in the related Trust Fund for purposes of the REMIC Provisions. The aggregate amount of principal of and interest distributable on the Certificates of any Series on any Distribution Date shall be equal to the Certificate Distribution Amount for such Series on such Distribution Date with the principal component of such amount being equal to the related Principal Distribution Amount. Distributions of any such Principal Distribution Amount shall be made in such amounts as among Classes of Certificates, and subject to such other conditions, as are provided in the Issue Supplement with respect to such Series. All distributions of such Principal Distribution Amount for any such Distribution Date which are made with respect to a particular Class of Certificates shall be made pro rata among all Certificates of such Class in proportion to their respective principal denominations, with no preference or priority of any kind. All distributions made with respect to any Certificate on any Distribution Date shall be applied first to the interest, if any, distributable thereon on such Distribution Date and then to the principal, if any, thereof. All computations of interest accrued on any Certificate shall be made as if each year consisted of twelve months of thirty days each. Interest accrued on any Certificate of a Series during any Interest Accrual Period shall be distributable on the following Distribution Date for such Series at the Certificate Interest Rate applicable to such Certificate applied to the Certificate Principal Balance or, in the case of an Interest Only Certificate, the Notional Principal Balance thereof. Section 3.02. Issuance of Regular Certificates. The Certificates of any Series shall be issued in book-entry form and shall be maintained in the names of the record owners thereof as entries on the books of a Reserve Bank. The Regular Certificates of any Series shall be in such authorized denominations as shall be specified in the applicable Issue Supplement and may be transferred or pledged in accordance with and subject to then applicable regulations governing Farmer Mac's use of the book- entry system (as the same shall be in effect at the time of any such transfer or pledge), Federal Reserve Bank of New York Operating Circulars 21 and 21A and procedures that are followed generally for book-entry securities. If an Issue Supplement for a Series so provides, the Regular Certificates comprising a Series or the Regular Certificates comprising a Class or Classes of Certificates of such Series may be issued in definitive or temporary form. Certificates issued in such form shall be subject to the provisions of the related Issue Supplement, including, without limitation, provisions regarding denominations, registration, transfer, exchange, and, if applicable, conversion to book-entry form. Section 3.03. Execution, Authentication, Availability and Dating of the Residual Certificates. The Residual Certificates of a Series shall be definitive Certificates substantially in the form set forth in an exhibit to the related Issue Supplement and shall be executed by an Authorized Signatory of the Trustee under its corporate seal which may be in facsimile form and be imprinted or otherwise reproduced thereon. The signature of any Authorized Signatory on a Residual Certificate may be manual or facsimile. A Residual Certificate bearing the manual or facsimile signature of an individual who was at any time an Authorized Signatory shall be binding, notwithstanding that such individual may have ceased to hold the relevant office or title prior to the authentication and delivery of such Certificate or did not hold such relevant office or title at the date of authentication and delivery of such Certificate. No Residual Certificate shall be entitled to any benefit under an Agreement or be valid for any purpose, unless there appears on such Residual Certificate a certificate of authentication substantially in the form provided for herein, executed by the Certificate Registrar by the manual or facsimile signature of an Authorized Signatory, and such certificate upon any Residual Certificate shall be conclusive evidence, and the only evidence, that such Residual Certificate has been duly authenticated and made available hereunder. Each Residual Certificate shall be dated the date of its authentication. Section 3.04. Registration and Registration of Transfer of Residual Certificates. (a) The Trustee shall cause to be kept to the Corporate Trust Office which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of the Residual Certificates and the registration of transfers of the Residual Certificates. Unless otherwise provided in an Issue Supplement for a Series, the Trustee shall act as Certificate Registrar and Transfer Agent for the purpose of registration of the Residual Certificates of such Series and transfers thereof, as provided herein. Upon any resignation of any Certificate Registrar or Transfer Agent, Farmer Mac shall promptly appoint a successor or, in the absence of such appointment, assume the duties of Certificate Registrar or Transfer Agent, as the case may be. (b) Upon surrender for registration of transfer of any Residual Certificate in accordance with this Section 3.04 at the Corporate Trust Office, the Trustee shall execute, and the Certificate Registrar shall authenticate and make available, in the name of the designated transferee, one or more new Residual Certificates of the appropriate Class and aggregate denomination. A Residual Certificate presented or surrendered for registration of transfer shall (if so required by the Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Certificate Registrar duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing, and shall be accompanied by such other documents as the Trustee may require. (c) Any purported transfer of record or beneficial ownership, direct or indirect (whether pursuant to a purchase, a default under a secured lending agreement or otherwise), to a Disqualified Organization of any Residual Certificate, or any beneficial interest therein, shall be void and of no effect. In no event shall the Certificate Registrar accept surrender for transfer, registration of transfer, or register the transfer of any Residual Certificate nor authenticate and make available any new Residual Certificate unless the Certificate Registrar has received a properly executed United States Internal Revenue Service Form W-9 together with an affidavit from the proposed transferee in the form attached to the related Issue Supplement. The foregoing restrictions that are applicable to prevent the transfer of a Residual Certificate to a Disqualified Organization shall cease to have any further effect (and the applicable portions of the legend to the Residual Certificate may be deleted) in the event that the Trustee determines, upon the advice of its tax counsel, that such restrictions are not necessary to preclude the imposition of a tax on the Trust Fund or upon the transferor of a Residual Certificate, or to maintain the qualification of each Trust Fund as a REMIC and, as a result of such determination, each related Agreement is amended to declare such restrictions to be of no further effect. (d) Under the REMIC Provisions, any purported transfer to a U.S. Person of record or beneficial ownership, direct or indirect (whether pursuant to a purchase, a default under a secured lending agreement or otherwise), of a Residual Certificate that is a "noneconomic residual interest" within the meaning of the REMIC Provisions for the purpose of avoiding or impeding the assessment or collection of tax shall be disregarded for all U.S. federal tax purposes. The affidavit required to be supplied by each transferee of a Residual Certificate pursuant to Section 3.04(c) also shall contain a statement that no purpose of the transfer of the Residual Certificate is to avoid or impede the assessment or collection of tax, that the proposed transferee understands that it may incur tax liabilities in excess of any cash flows generated by a Residual Certificate and that it intends to pay taxes associated with holding a Residual Certificate as they become due. (e) Any purported transfer of record or beneficial ownership, direct or indirect (whether pursuant to a purchase, a default under a secured lending agreement or otherwise), to a person that is not a U.S. Person, of any Residual Certificate, or any beneficial interest therein, shall be void and of no effect. The foregoing restriction shall cease to have any effect with respect to a transfer of a Residual Certificate to a person that is not a U.S. Person only if the Trustee has consented to such transfer expressly in writing. (f) A Residual Certificate issued upon any registration of transfer thereof shall be entitled to the same benefits under the related Agreement as the Residual Certificate surrendered upon such registration of transfer. (g) A service charge in an amount determined by the Trustee (such amount being based on a service charge schedule on file in the Corporate Trust Office of the Certificate Registrar and in the office of the Corporate Secretary of Farmer Mac) shall be made for any registration of transfer of a Residual Certificate, and the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of a Residual Certificate, other than exchanges pursuant to Section 3.05 hereof not involving any transfer. Section 3.05. Mutilated, Destroyed, Lost or Stolen Residual Certificates. If (i) any mutilated Residual Certificate is surrendered to the Trustee or the Certificate Registrar or (ii) the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Residual Certificate, and there is delivered to the Trustee such security or indemnity as may be required by it to save it harmless, then, in the absence of notice to the Trustee that such Residual Certificate has been acquired by a bona fide purchaser, the Trustee shall execute and the Certificate Registrar shall authenticate and make available, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Residual Certificate, a new Certificate of the appropriate Class. Upon the issuance of any new Residual Certificate under this Section 3.05, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Certificate Registrar) connected therewith. Any duplicate Residual Certificate issued pursuant to this Section 3.05 shall constitute complete and indefeasible evidence of ownership in the Trust Fund as if originally issued, whether or not the lost or stolen Residual Certificate shall be found at any time. Section 3.06. Persons Deemed Owners of Residual Certificates. Prior to due presentation of a Residual Certificate for registration of transfer, Farmer Mac, the Trustee, the Certificate Registrar and any agent of Farmer Mac or the Trustee may treat the person in whose name the Residual Certificate is registered as the owner of the Residual Certificate for the purpose of receiving distributions, if any, pursuant hereto and for all other purposes whatsoever, and neither Farmer Mac nor the Trustee, the Certificate Registrar or any agent of Farmer Mac or the Trustee shall be affected by notice to the contrary. Section 3.07. Reference in the Residual Certificates to Supplemental Agreements. A Residual Certificate authenticated and made available after the execution of any Supplemental Agreement pursuant to Article X of this Trust Agreement may, and if required by the Trustee shall, bear a notation as to any matter provided for in such Supplemental Agreement. If the Trustee shall so determine, new Residual Certificates so modified as to conform, in the opinion of the Trustee, to any such Supplemental Agreement may be prepared and executed by the Trustee and authenticated and made available by the Certificate Registrar in exchange for the outstanding Residual Certificates, as applicable. Section 3.08. Amendment Relating to Transfers to Disqualified Organizations. Farmer Mac, FMMSI and the Trustee may, without the consent of any Holders of the Certificates, upon notice to the Holders of the Residual Certificates, notwithstanding any provisions hereof to the contrary, amend this Trust Agreement in such manner as they may choose; provided, however, that any such amendment shall be limited to such matters as, in the judgment of the parties hereto, based upon the written advice of tax counsel, are reasonably necessary (i) to ensure that the record ownership of, or any beneficial interest in, any Residual Certificate is not transferred, directly or indirectly, to a Disqualified Organization; and (ii) to provide for a means to compel the transfer of any Residual Certificate which is held by a Disqualified Organization. ARTICLE IV Servicing of Qualified Loans Section 4.01. General. Farmer Mac shall service the Qualified Loans comprising each Trust Fund, and shall have full power and authority to do or cause to be done any and all things in connection therewith as it may deem necessary or appropriate in its sole discretion; provided, however, that Farmer Mac shall have no authority to sell or hypothecate, or, subject to Section 4.03, make any substitution for any Qualified Loan. Farmer Mac in its discretion shall foreclose upon or otherwise comparably convert the ownership of the Mortgaged Property securing any Qualified Loan as to which a default occurs. To the extent consistent with then-current policies of Farmer Mac or customary practices in the agricultural real estate mortgage servicing industry, Farmer Mac in its discretion may enforce or waive enforcement of any of the terms of any Qualified Loan or enter into an agreement for the modification of any of the terms of any Qualified Loan (other than, except as may be required by terms of the Mortgage Note, a reduction in the Mortgage Interest Rate), or take any action or refrain from taking any action in servicing any Qualified Loan. In such connection, Farmer Mac may waive, except as may be provided in the related Issue Supplement, any Prepayment Premium, assumption fee or late payment charge. Although Farmer Mac will conduct such servicing through the facilities of Central Servicers pursuant to Servicing Contracts it shall not thereby be released from any of its duties or responsibilities hereunder or under the applicable Issue Supplement. Any Servicing Contract and any other transactions or services relating to the Qualified Loans involving a Central Servicer shall be deemed to be between the Central Servicer and Farmer Mac alone and the Trustee and Certificateholders shall not be deemed parties thereto and shall have no claims, rights, obligations, duties or liabilities with respect to any Central Servicer. Section 4.02. Transfers of Mortgaged Property. In connection with the transfer, or prospective transfer, of title to a Mortgaged Property, Farmer Mac may, but shall not be required to, accelerate the maturity of the related Qualified Loan where such Qualified Loan contains a due-on-sale clause permitting acceleration under such a circumstance. In the event that, for any reason, Farmer Mac does not accelerate the maturity of a Qualified Loan upon the transfer, or prospective transfer of title to the underlying Mortgaged Property, Farmer Mac may enter into a transaction by which the obligor is released from liability on the related Qualified Loan and the transferee assumes such liability; provided, however, that no such transaction shall provide for reduction of the Mortgage Interest Rate or, to the extent adverse to the interests of Certificateholders, provide for a change in any interest rate adjustment provision or provision governing the calculation of scheduled payments. Section 4.03. Optional Purchase of Delinquent Qualified Loans or Mortgaged Property; Substitution or Repurchase of Defective Qualified Loans. Farmer Mac shall have the right and option, without obligation and in its discretion, to purchase from the related Trust Fund, upon payment of the Purchase Price, any Qualified Loan at any time after such Qualified Loan becomes and remains delinquent in the payment of any Installment Payment or portion thereof for a period of ninety days. Farmer Mac shall likewise have the right and option, without obligation and in its discretion, to purchase from the related Trust Fund, upon payment of the Purchase Price, any REO Property received in connection with the foreclosure or comparable conversion of any Qualified Loan. Farmer Mac may, in the case of a breach of warranty by a Seller of any Qualified Loan or a defect in documentation, (i) purchase, or cause the related Seller to purchase, at the Purchase Price such Qualified Loan from the Trust Fund or (ii) substitute, or cause the related Seller to substitute, an additional Qualified Loan or Qualified Loans for such Qualified Loan as long as any such substitution takes place within two years of the original issuance of Certificates evidencing beneficial interests in the related Trust Fund and otherwise conforms to the REMIC Provisions. Any Substitute Qualified Loan shall (i) have a Cut-Off Date Principal Balance which is not greater than the Scheduled Principal Balance of the replaced defective Qualified Loan (the amount of any difference being deemed to be a Curtailment), (ii) have an original final maturity not later than the original final maturity of any Qualified Loan in the Trust Fund and not earlier than two years prior to the original final maturity of the related replaced defective Qualified Loan, (iii) have a Mortgage Interest Rate which, on the date of substitution, is not less than the interest rate borne by the replaced defective Qualified Loan; (iv) have similar Due Dates as the replaced defective Qualified Loan; and (v) conform to such other criteria for Substitute Mortgage Loans as shall be set forth in the related Issue Supplement. In connection with any such substitution, Farmer Mac shall amend the Qualified Loan Schedule to reflect the withdrawal of the replaced defective Qualified Loan and the assignment to the Trustee of the Substitute Qualified Loan. If the Trustee's interest in a replaced defective Qualified Loan is evidenced by a Participation Certificate, the assignment to the Trustee of the Substitute Qualified Loan may be evidenced by a Participation Certificate. Section 4.04. Servicing Compensation; Payment of Certain Expenses by Farmer Mac. As compensation for its activities and obligations hereunder, Farmer Mac or any Central Servicer acting on its behalf shall be entitled to retain such amounts as shall be specified herein and in the related Issue Supplement. Farmer Mac shall pay the Trustee's fee and all other expenses incurred by it hereunder in connection with its servicing activities and shall, except for Liquidation Expenses and any such other reimbursable expenses as may be set forth in the related Issue Supplement, not be entitled to reimbursement therefor. Unless otherwise provided in the applicable Issue Supplement, additional servicing compensation in the form of Prepayment Premiums, assumption fees, late payment charges or otherwise shall be retained by Farmer Mac or, to the extent provided in the related Servicing Contract, by the related Central Servicer. Section 4.05. Collection of Certain Qualified Loan Payments; Collection Account. Farmer Mac shall require the Central Servicer in the related Servicing Contract to establish and maintain a Collection Account (which Collection Account may be the Collection Account for one or more Trust Funds) with an Eligible Depository in the name of the Central Servicer in which the Central Servicer shall deposit upon receipt on a daily basis, except as otherwise specifically provided herein or in the related Issue Supplement, the following payments and collections received by it subsequent to the Cut-Off Date (other than in respect of principal and interest on the Qualified Loans due on or before the Cut-Off Date): (i) All payments on account of principal on the Qualified Loans; (ii) All payments on account of interest on the Qualified Loans adjusted, in each case, to interest at the applicable Net Mortgage Rate; (iii) Net Liquidation Proceeds, REO Proceeds (net of any related expenses) and Insurance Proceeds (other than Insurance Proceeds to be applied to the restoration or repair of the related Mortgaged Property or released to the Borrower in accordance with the Central Servicer's normal servicing procedures) net of any amounts permitted to be withheld by the Central Servicer as servicing compensation pursuant to the Servicing Contract or permitted to be paid to the Central Servicer pursuant to such Servicing Contract; (iv) Any Advance by the Central Servicer pursuant to the related Servicing Contract (except that any such Advance made on the related Qualified Loan shall be deposited directly into the related Certificate Account on the Certificate Account Deposit Date in the month of the related Distribution Date); and (v) Any other amounts of the nature specified in the related Servicing Contract or Issue Supplement. The foregoing requirements for deposit in the Collection Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments on the Qualified Loans that are not part of the Trust Fund (including payments in respect of principal and interest on the Qualified Loans due on or before the Cut-Off Date) and, unless otherwise specified in the related Issue Supplement or Servicing Contract, payments or collections in the nature of Prepayment Premiums, late payment charges or assumption fees may but need not be deposited by the Central Servicer in the Collection Account. In the event the Central Servicer shall deposit in the Collection Account any amount not required to be deposited therein, it may at any time withdraw such amount from the Collection Account, any provision herein to the contrary notwithstanding. All amounts held in the Collection Account may be invested by the Central Servicer in Eligible Investments maturing prior to the applicable Certificate Account Deposit Date. Section 4.06. Permitted Withdrawals from the Collection Account. The Central Servicer may, from time to time as provided herein, make withdrawals from the Collection Account for the following purposes: (i) to reimburse itself for previously unreimbursed Advances, the Central Servicer's right to withdraw amounts pursuant to this clause (i) being limited to amounts received on particular Qualified Loans which represent late recoveries of Installment Payments respecting which any such Advance was made; (ii) to reimburse itself for any Nonrecoverable Advance, and to pay to itself or to any other person or entity designated in the related Servicing Contract any income from Eligible Investments in the Collection Account; (iii) to pay to Farmer Mac on or before each Certificate Account Deposit Date for deposit in the Certificate Account all amounts at the time held in the Collection Account other than amounts held therein which consist of Amounts held for Future Distribution; (iv) to pay to Farmer Mac on a daily basis any amounts held in the Collection Account which are allocable to a Certificate Distribution Amount and which were delinquent as of the Certificate Account Deposit Date next preceding the related Distribution Date and were not represented by any related Advance; and (v) to withdraw such other amounts for such other purposes as shall be specified in the related Issue Supplement, Servicing Contract or Loan Sale Agreement. ARTICLE V Certificate Account; Distributions; Farmer Mac Guarantee Section 5.01. Certificate Account. On or before the issuance of a Series of Certificates, Farmer Mac shall either (i) open with an Eligible Depository one or more trust accounts in the name of the Trustee applicable to the related Trust Fund that shall collectively be the "Certificate Account" or (ii) in lieu of maintaining any such account or accounts, maintain the Certificate Account for the related Trust Fund by means of appropriate entries on its books and records designating all amounts credited thereto in respect of the related Qualified Loans as being held by it for the benefit of the Holders of Certificates evidencing beneficial ownership of such Trust Fund. To the extent that the Certificate Account for any Trust Fund is maintained by Farmer Mac in the manner provided in clause (ii) above, all references herein to deposits and withdrawals from the Certificate Account shall be deemed to refer to credits and debits to the related books of Farmer Mac. Farmer Mac shall deposit in the Certificate Account all amounts remitted to it by the Central Servicer representing withdrawals from the Collection Account pursuant to Section 4.05, together with the Purchase Price for each Qualified Loan or REO Property purchased pursuant to Section 4.03. Farmer Mac shall also deposit in the Certificate Account the amount of any Curtailments in connection with any Substitute Qualified Loans as described in Section 4.03. All amounts deposited by Farmer Mac from time to time in a Certificate Account for a Trust Fund, and all investments made with such moneys, including all income or other gain from such investments, shall be held by Farmer Mac in the Certificate Account as part of the Trust Fund as herein provided, subject to withdrawal by Farmer Mac for the purposes set forth in Section 5.03. All or a portion of amounts on deposit in a Certificate Account shall be invested and reinvested by Farmer Mac in one or more Eligible Investments bearing interest or sold at a discount. No such investment shall mature later than the Business Day immediately preceding the next applicable Distribution Date except that (i) if Farmer Mac shall have determined to make a special distribution on the related Series of Certificates pursuant to Section 5.06, no such Eligible Investment purchased subsequent to such determination shall mature subsequent to the Business Day next preceding such Special Distribution Date and (ii) any investment on which the Eligible Depository, in its commercial capacity, or Farmer Mac is the obligor, may mature on the related Distribution Date or Special Distribution Date, as the case may be. No Eligible Investment may be sold while in the Certificate Account except to the extent that (i) Farmer Mac believes that a sale of an Eligible Investment is desirable because of the possibility of a default by the obligor thereon or (ii) Farmer Mac has determined to make a special distribution on the related Series of Certificates and amounts will not be on deposit in the Certificate Account on the related Special Distribution Date sufficient to make the special distribution to be made thereon, in which case Eligible Investments may be sold in the smallest amount practicable to cure any such insufficiency. Section 5.02. Calculation of Certificate Distribution Amount; Publication of Certificate Principal Factors. On or before each Certificate Distribution Amount Determination Date for a Series, Farmer Mac shall calculate the Certificate Distribution Amount for the following Distribution Date. Immediately following each such calculation, Farmer Mac shall notify the Trustee in writing as to the amount so calculated and the allocation thereof as between principal and interest. As soon as practicable thereafter, Farmer Mac shall make available generally to financial publications or electronic services the Certificate Principal Factor (carried to eight decimal places) for each Class of Certificates after giving effect to the distribution of the Principal Distribution Amount on the following Distribution Date. Section 5.03. Withdrawals from the Certificate Account. Amounts on deposit in the Certificate Account on the Distribution Date for a Series shall be withdrawn by Farmer Mac, in the amounts required, to the extent funds are available therefor, for application as follows: first, towards the distribution to Certificateholders of the Certificate Distribution Amount for such Distribution Date; second, to the payment of any Guarantee Reimbursement Amount; third, to the payment of any portion of the Guarantee Fee for such Distribution Date or any prior Distribution Date which has not otherwise been paid; and fourth, to the payment to Farmer Mac of any amounts remaining in the Certificate Account after the withdrawals referred to in clauses first through third above any such amounts being deemed to be payable to Farmer Mac as compensation for its servicing activities hereunder and to the reimbursement of expenses incurred by it in connection herewith. In addition, on any Special Distribution Date for a Series Farmer Mac shall withdraw from the related Certificate Account such amount as it shall have determined to distribute to Certificateholders on such Special Distribution Date. Section 5.04. Distributions on Certificates. On each Distribution Date for a Series, Farmer Mac shall withdraw from the Certificate Account for such Series, to the extent of funds available therefor, the Certificate Distribution Amount for such Distribution Date previously calculated by it pursuant to Section 5.02. In the event that the Certificate Distribution Amount may not be paid from amounts in the Certificate Account, Farmer Mac shall, pursuant to its guarantee obligations set forth in Section 5.05 hereof, provide from its own funds the amount of any insufficiency and shall distribute in Federal Funds to each Certificateholder of record on the preceding Record Date the amount distributable on such Certificateholder's Certificate(s) as determined pursuant to Section 3.01. Concurrently therewith, in the event the Certificate Account shall not be maintained with the Trustee, Farmer Mac shall furnish to the Trustee an Officer's Certificate (which may also relate to other Series comprised of Classes having a similar Distribution Date) to the effect that distribution of the Certificate Distribution Amount for such Series and Distribution Date has been made by it. As promptly as practicable following each Certificate Account Deposit Date in the month of a Distribution Date, Farmer Mac shall, in the event the amount on deposit in the Certificate Account shall be less than the Certificate Distribution Amount for such Distribution Date, provide to the Trustee an Officer's Certificate stating (i) the amount of such insufficiency, (ii) whether Farmer Mac is certain that funds will be available to it on such Distribution Date in an amount sufficient to cure such insufficiency without the necessity of borrowing from the United States Treasury and (iii) in the event that the response to (ii) is in the negative, attaching to such Officer's Certificate a copy of the certification furnished to the Secretary of the Treasury requesting that funds in the necessary amount be made available to Farmer Mac on or before such Distribution Date for purposes of satisfying its guarantee obligations in respect of the related Series of Certificates. Section 5.05. Farmer Mac Guarantee. Farmer Mac agrees to pay to the Holders of Certificates of each Series on each Distribution Date therefor the entire Certificate Distribution Amount for such Distribution Date irrespective of whether amounts on deposit in the related Certificate Account shall be sufficient therefor, any insufficiency being provided by Farmer Mac from its own funds whether internally generated, borrowed from the United States Treasury or otherwise available. Farmer Mac's obligations hereunder shall inure to the benefit of and shall be enforceable by any Holder of a Certificate through the Trustee (or individually by any such Holder in the event the Trustee shall have failed to make prompt demand upon Farmer Mac after due notification from any such Holder) if, for any reason beyond the control of such Holder, such Holder shall have failed to receive on any Distribution Date such Holder's interest in the Certificate Distribution Amount for such Distribution Date. Farmer Mac hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, legality or enforceability of, or any change in or amendment to, this Agreement, or any breach with respect to any Guarantee Fee payable to Farmer Mac in consideration of its guarantee, the absence of any action to enforce the same, the waiver or consent by the Holder of any Certificate or by the Trustee with respect to any provisions of this Agreement, or any action to enforce the same or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor. Farmer Mac hereby waives diligence, presentment, demand of payment, protest or notice with respect to each Certificate or the interest represented thereby, and all demands whatsoever, and covenants that this guarantee will not be discharged except upon complete irrevocable payment of the principal and interest obligations represented by the Certificates. Farmer Mac shall be subrogated to all rights of the Holders of Certificates of any Series against the related Trust Fund and the proceeds of the Trust Fund in respect of any amounts paid by Farmer Mac pursuant to the provisions of its guarantee; provided, however, that Farmer Mac's entitlement thereto on any Distribution Date shall be limited to the amount, if any, of any Guarantee Reimbursement Amount and shall be further subject to the priorities set forth in Section 5.03 hereof. No reference herein shall alter or impair the guarantee of Farmer Mac, which is absolute and unconditional, of the due and punctual distribution to Holders of Certificates of each Series on each Distribution Date of the Certificate Distribution Amount therefor. The Farmer Mac Guarantee is not an obligation of, and is not guaranteed as to principal or interest by the Farm Credit Administration, the United States or any other agency or instrumentality of the United States (other than Farmer Mac). Section 5.06. Special Distributions. To the extent specified in the Issue Supplement for a Series, Farmer Mac may elect to make, or, if so specified, shall be required to make under circumstances described in such Issue Supplement a special distribution with respect to such Series on a Special Distribution Date selected by it. All payments of principal pursuant to any special distribution shall be made in the same priority and manner as distributions of principal on any Distribution Date. Any such special distribution shall be made to the Holders of Certificates of the applicable Class or Classes as of the Special Record Date pertaining thereto and shall include accrued interest at the applicable Certificate Interest Rate or Certificate Interest Rates on the principal amount so distributed to the Special Distribution Date or to such earlier date as shall be specified in the related Issue Supplement. As soon as practicable after Farmer Mac has determined to make a special distribution as provided in this Section 5.06, Farmer Mac will make available generally to financial publications or electronic services notice of such special distribution which shall include the Special Record Date and Special Distribution Date applicable thereto, and the Certificate Principal Factor for each Class of such Series after giving effect to such special distribution on the related Special Distribution Date. ARTICLE VI Limitation of Liability Section 6.01. General Limitation. Farmer Mac and FMMSC shall be liable under the terms of the Certificates, this Trust Agreement and any related Issue Supplement only to the extent of faithful performance of the duties and responsibilities imposed by the terms of this Trust Agreement and any related Issue Supplement. Section 6.02. Measure of Liability. Neither Farmer Mac nor FMMSC nor any of their respective directors, officers, employees or agents shall be under any liability for any action taken or for refraining from the taking of any action in good faith pursuant to the terms of this Trust Agreement and any related Issue Supplement, or for errors in judgment; provided, however, that this provision shall not protect Farmer Mac or FMMSC or any such person against any liability for action or inaction by reason of willful misfeasance, bad faith or gross negligence, or by reason of willful disregard of obligations and duties. Neither Farmer Mac nor FMMSC shall have any obligation to appear in, prosecute or defend any legal action which is not incidental to their respective duties under this Trust Agreement and any related Issue Supplement and which in their opinion may involve either of them in expense or liability; provided, however, that either Farmer Mac or FMMSC in their discretion may undertake any such legal action which they may deem necessary or desirable in the interests of Holders of Certificates. In the event that either Farmer Mac or FMMSC in their discretion so determine to undertake any such legal action, the party taking such action for its own account shall pay and defray the expense of any such action, including attorneys' fees. Such expense resulting from any such legal action shall be reimbursable only to the extent amounts are available for withdrawals from the Certificate Account pursuant to clause fourth of Section 5.03. ARTICLE VII Farmer Mac Section 7.01. Resignation. Farmer Mac shall not resign from the duties imposed upon it by the terms of this Trust Agreement and any Issue Supplement. Section 7.02. Merger or Consolidation. Any corporation or other entity into which Farmer Mac is merged or consolidated, or any corporation or other entity resulting from any merger, conversion or consolidation to which Farmer Mac shall be a party, or any corporation or other entity succeeding to the business of Farmer Mac, shall succeed to and assume all duties imposed upon Farmer Mac by the terms of this Trust Agreement and all Issue Supplements, without the filing of any instrument or the performance of any further act by Farmer Mac or any Certificateholder. Farmer Mac promptly shall furnish written notice of such succession to all Certificateholders. Section 7.03. Succession Upon Default. With respect to any Trust Fund, each of the following events shall constitute an Event of Default by Farmer Mac: (a) any failure by Farmer Mac to distribute to Holders of Certificates of any Class in such Trust Fund any distribution required to be made under the terms of this Trust Agreement and the related Issue Supplement (including, for this purpose, pursuant to the Farmer Mac Guarantee) which continues unremedied for a period of five days after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac by the Trustee or to Farmer Mac and the Trustee by the Holders of Certificates of such Class having Certificate Principal Balances or Notional Principal Balances aggregating not less than 5% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class; or (b) failure on the part of Farmer Mac duly to observe or perform in any material respect any other of the covenants or agreements on the part of Farmer Mac in this Trust Agreement and the related Issue Supplement which continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Farmer Mac and the Trustee by the Holders of Certificates of any Class in the related Trust Fund having Certificate Principal Balances or Notional Principal Balances aggregating not less than 25% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class; or (c) a decree or order of a court or agency or supervisory authority having jurisdiction in the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against Farmer Mac and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days; or (d) Farmer Mac shall consent to the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings relating to Farmer Mac or to all or substantially all of its property; or (e) Farmer Mac shall admit in writing its inability to pay its debts generally as they become due, file a petition to invoke any applicable insolvency or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. With respect to any Trust Fund, upon the occurrence of an Event of Default, and so long as such Event of Default shall not have been remedied, the Trustee or the Holders of Certificates of any Class in the related Trust Fund having Certificate Principal Balances or Notional Principal Balances aggregating not less than 25% of the aggregate of the Certificate Principal Balances or Notional Principal Balances of all of the Certificates of such Class may (a) terminate all obligations and duties imposed upon Farmer Mac (other than its obligations under the Farmer Mac Guarantee pursuant to Section 5.05) under this Trust Agreement and the related Issue Supplement, and (b) name and appoint a successor or successors to succeed to and assume all of such obligations and duties. Such actions shall be effected by notice in writing to Farmer Mac and shall become effective upon receipt of such notice by Farmer Mac and the acceptance of such appointment by such successor or successors. On and after the receipt by Farmer Mac of such written notice and the acceptance by the successor or successors to Farmer Mac, all obligations (other than its continuing obligations under the Farmer Mac Guarantee) and duties imposed upon Farmer Mac under this Trust Agreement and the related Issue Supplement shall pass to and vest in the successor or successors named in the notice, and such successor or successors shall be authorized, and hereby are authorized, to take all such action and execute and deliver all such instruments and documents on behalf of Farmer Mac, as attorney in fact or otherwise, as may be necessary and appropriate to effect the purposes of such written notice. Section 7.04. Farmer Mac as Holder. Farmer Mac shall have the right to purchase and hold for its own account any Certificate issued pursuant to the terms of this Trust Agreement and any Issue Supplement, notwithstanding the rights and duties conferred and imposed upon Farmer Mac by this Trust Agreement and any such applicable Issue Supplement. In determining whether the Holders of the requisite amount of Certificates have given any request, demand, authorization, direction, notice, consent or waiver hereunder, any Certificate evidencing a beneficial ownership interest in the related Trust Fund held by Farmer Mac shall be disregarded and deemed not to be outstanding. ARTICLE VIII Concerning the Trustee Section 8.01. Duties of Trustee. (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Agreement. If an Event of Default occurs and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and use the same degree of care and skill in their exercise as a prudent investor would exercise or use under the circumstances in the conduct of such investor's own affairs. Any permissive right of the Trustee contained in this Agreement shall not be construed as a duty. (b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee which are specifically required to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform to the requirements of this Agreement. If any such instrument is found not to conform to the requirements of this Agreement in a material manner, the Trustee shall take action as it deems appropriate to have the instrument corrected and if the instrument is not corrected to the Trustee's satisfaction, the Trustee will provide notice thereof to the Certificateholders. (c) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own misconduct; provided, however, that: (i) Prior to the occurrence of an Event of Default, and after the curing of all such Events of Default that may have occurred, the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; (ii) 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 shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) The Trustee shall not be personally liable with respect to any action taken, suffered or omitted to be taken by it in good faith in accordance with the direction of Farmer Mac 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 this Agreement; and (iv) No provision of this Agreement shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (d) For all purposes of this Agreement, the Trustee shall not be deemed to have knowledge of any Event of Default or event that, with notice or lapse of time, or both, would become an Event of Default, unless a Responsible Officer of the Trustee shall have received written notice thereof from the Central Servicer or Farmer Mac or a Responsible Officer of the Trustee shall have actual knowledge thereof, and in the absence of such written notice or knowledge no provision hereof requiring the taking of any action or the assumption of any duties or responsibility by the Trustee following the occurrence of any Event of Default or event which, with notice or lapse of time, or both, would become an Event of Default, shall be effective as to the Trustee. Section 8.02. Certain Matters Affecting the Trustee. (a) Except as otherwise provided in Section 8.01: (i) The Trustee may request and rely 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 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 (including counsel for Farmer Mac), and any Opinion of Counsel shall be full and complete authorization and protection 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 this Agreement or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Certificateholders or Farmer Mac, pursuant to the provisions of this Agreement, unless such Certificateholders or Farmer Mac shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default (which has not been cured), to exercise such of the rights and powers vested in it by this Agreement, and to use the same degree of care and skill in their exercise as a prudent investor would exercise or use under the circumstances in the conduct of such investor's own affairs; (iv) The Trustee shall not be personally liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement; (v) Prior to the occurrence of an Event of Default hereunder and after the curing of all Events of Default that may have occurred, 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 or document, unless requested in writing so to do by Farmer Mac or by the Holders of Certificates of the related series evidencing not less than 25% of the Aggregate Certificate Principal Balance (together with the total of all Class Notional Principal Balances if such Series includes one or more Interest Only Classes); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require reasonable indemnity against such expense or liability as a condition to so proceeding. The reasonable expense of every such investigation shall be paid by Farmer Mac; and (vi) The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys. (b) It is understood and agreed that, in exercising any right to direct the Trustee in the performance of its duties under this Agreement prior to the occurrence of an Event of Default and after the curing of all Events of Default, Farmer Mac shall be acting for the benefit of the Certificateholders of the related Series; provided, that nothing in this Agreement shall be construed to require Farmer Mac to exercise any such right or to impose any liability on Farmer Mac for its election, in its sole discretion, in any instance to exercise or to refrain from exercising any such right. No failure by Farmer Mac to exercise such right in any instance shall be deemed a waiver of such right in any other instance. The Trustee shall be entitled to rely on any such direction rendered to it by Farmer Mac without inquiry as to the propriety or validity thereof, and shall be protected in acting on such direction. Section 8.03. Trustee Not Liable for Certificates or Qualified Loans. Except as otherwise expressly provided herein, the Trustee shall not be accountable for the use or application by the Central Servicer or Farmer Mac of any funds paid to the Central Servicer or Farmer Mac, in respect of the Qualified Loans or deposited in or withdrawn from the Collection Account or the Certificate Account by the Central Servicer or Farmer Mac, as the case may be. The Trustee makes no representations or warranties as to the validity or sufficiency of the Certificates or of any Qualified Loan or related document, except that the Trustee represents that this Agreement has been duly authorized, executed and delivered by it and, assuming due execution and delivery by the other parties hereto, constitutes its valid and binding obligation, enforceable against it in accordance with its terms except that such enforceability may be subject to (i) applicable bankruptcy and insolvency laws and other similar laws affecting the enforcement of the rights of creditors generally, and (ii) general principles of equity regardless of whether such enforcement is considered in a proceeding in equity or at law. Section 8.04. Trustee May Own Certificates. The Trustee in its individual or any other capacity may become the owner or pledgee of Certificates of any series with the same rights it would have if it were not Trustee. Section 8.05. Indemnification of the Trustee. Each Trust Fund shall indemnify the Trustee in its individual capacity and as Trustee and any director, officer, employee or agent of the Trustee in its individual capacity and as Trustee for, and hold them harmless against, any loss or liability incurred by any of them without negligence or bad faith on the part of the Trustee in its individual capacity and as Trustee or any such director, officer, employee or agent of the Trustee in its individual capacity and as Trustee and arising out of or in connection with the acceptance or administration of the trusts created herewith, including the costs and expenses of defending the Trustee in its individual capacity and as Trustee or any such director, officer, employee or agent of the Trustee in its individual capacity and as Trustee against any claim or liability incurred by any of them in connection with the exercise or performance of any of their powers or duties hereunder, but not including any expenses incurred in the ordinary course of performing the Trustee's duties as set forth herein. Section 8.06. Eligibility Requirements for Trustee. The Trustee hereunder shall at all times be a corporation having its principal office in a state and city acceptable to Farmer Mac and organized and doing business under the laws of such state or the United States of America, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000 and subject to supervision or examination by federal or state authority. If such corporation 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 such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 8.07. Section 8.07. Resignation and Removal of the Trustee. (a) The Trustee may at any time resign and be discharged from the trusts hereby created by giving written notice thereof to Farmer Mac. Upon receiving such notice of resignation, Farmer Mac shall promptly appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 90 days after giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. (b) If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 8.06 and shall fail to resign after written request therefor by Farmer Mac or if at any time the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then Farmer Mac may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee and Farmer Mac shall give written notice thereof to the Central Servicer. Notwithstanding the foregoing, any liability of the Trustee under this Agreement arising prior to such termination shall survive such termination. (c) Farmer Mac may at any time remove the Trustee solely pursuant to the Master Trustee Agreement and appoint a successor trustee by written instrument or instruments within 90 days of such predecessor Trustee's removal. If no successor trustee shall have been so appointed and have accepted appointment within 90 days after the giving of such notice of removal, the predecessor trustee may petition any court of competent jurisdiction for the appointment of a successor trustee. (d) 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 8.08 but in no event shall become effective until a successor has been appointed and has accepted the duties of the Trustee. Section 8.08. Successor Trustee. (a) Any successor trustee appointed as provided in Section 8.07 shall execute, acknowledge and deliver to Farmer Mac and to its predecessor trustee an instrument accepting such appointment hereunder, and the successor trustee shall secure an Opinion of Counsel (which shall be an expense of such successor trustee) to the effect that, to the extent that the Trust Fund is exempt from Federal income taxation, the Trust Fund is not subject to state and local taxation in the jurisdiction where the successor trustee is located, whereupon 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 hereunder, with the like effect as if originally named as trustee herein. 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. (b) No successor trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor trustee shall be eligible under the provisions of Section 8.06. Section 8.09. Merger or Consolidation of Trustee. Any corporation into which the 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 the Trustee shall be a party, or any corporation succeeding to the business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be eligible under the provisions of Section 8.06, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. Section 8.10. Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions hereof, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Fund or property securing the same may at the time be located, Farmer Mac and the Trustee acting jointly shall have the power to execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the related Trust Fund, and to vest in such Person or Persons, in such capacity, such title to such Trust Fund, or any part thereof, and, subject to the other provisions of this Section 8.10, such powers, duties, obligations, rights and trusts as Farmer Mac and the Trustee may consider necessary or desirable. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 8.06 hereunder. Except as specifically provided in the first sentence of this paragraph, the Trustee shall have no other rights to appoint a co-trustee. (b) In the case of any appointment of a co-trustee or separate trustee pursuant to this Section 8.10, all rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed, the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Fund or any portion thereof in any such jurisdiction) shall be exercised and performed by such separate trustee or co-trustee at the direction of the Trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee and co-trustee shall refer to this Agreement and the conditions of this Article VIII. Each separate trustee and co-trustee, upon its acceptance of the trusts conferred, shall be vested with the estates or property specified in its instrument of appointment, either jointly with the Trustee or separately, as may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Every such instrument shall be filed with the Trustee. (d) Any separate trustee and co-trustee may, at any time constitute the Trustee its agent or attorney-in-fact, with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in an be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. Section 8.11. Controlling Provisions. In the event of any conflict between the provisions of the Master Trustee Agreement and this Agreement, the provisions of this Agreement shall be deemed controlling. Section 8.12. Trustee Fees. As compensation for its services hereunder, the Trustee shall be entitled to receive from Farmer Mac fees at such times, and in such amounts, as shall be specified for the related Trust Fund in the Master Trustee Agreement. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. ARTICLE IX Termination Section 9.01. Termination Upon Repurchase by Farmer Mac of All Qualified Loans. The respective obligations and responsibilities of Farmer Mac created hereby and by an Issue Supplement shall terminate as to the related Trust Fund upon the distribution by Farmer Mac to all Holders of Certificates evidencing beneficial ownership interests in such Trust Fund of all amounts required to be distributed hereunder and thereunder upon (i) the repurchase by Farmer Mac of all Qualified Loans and REO Property remaining in the related Trust Fund at a price computed in the manner specified in the related Issue Supplement, (ii) the final payment of the last Qualified Loan and/or REO Property remaining in the related Trust Fund; or (iii) distribution by Farmer Mac pursuant to the Farmer Mac Guarantee on the Final Distribution Date for the latest maturing Class of the Related Series of an amount sufficient to reduce the Class Certificate Principal Balance of such Class to zero; provided, however, that in no event shall any trust created hereby and by the related Issue Supplement continue beyond the expiration of 21 years from the death of the survivor of the descendants of Joseph P. Kennedy, the late ambassador of the United States of America to the Court of St. James', living on the Cut-Off Date of the related Series of Certificates. The right of Farmer Mac to repurchase all Qualified Loans and REO Property in a Trust Fund pursuant to (i) above shall be subject to such conditions as shall be set forth in the related Issue Supplement. Any such repurchase shall take place on a Distribution Date, and the proceeds of any such repurchase shall be distributed to Holders of Certificates on such Distribution Date in the respective proportions specified in the related Issue Supplement. In connection with any such termination, Farmer Mac shall make available to financial publications notice for the benefit of Holders of Certificates in the related Trust Fund to the effect that the final distribution will be made on the Distribution Date therein specified to Certificateholders of record on the applicable Record Date. ARTICLE X Supplemental Agreements Section 10.01. Permissible Without Action by Certificateholders. Farmer Mac, FMMSC and the Trustee, from time to time and at any time, may, without the consent of or notice (other than in the case of any instrument supplemental thereto pursuant to clause (b) below) to any Holder of a Certificate, enter into an agreement or other instrument supplemental hereto and which thereafter shall form a part hereof, for any one or more of the following purposes: (a) to add to the covenants of Farmer Mac, whether applicable to one or more Trust Funds; (b) to evidence the succession pursuant to Article VII of another Person or Persons to Farmer Mac and the assumption by such successor or successors of the obligations of Farmer Mac hereunder; (c) to eliminate any right reserved to or conferred upon Farmer Mac; (d) to take such action to cure any ambiguity or correct or supplement any provision in this Trust Agreement or in any Issue Supplement as Farmer Mac may deem necessary or desirable; or (e) to modify, eliminate or add to the provisions of this Trust Agreement and any related Issue Supplement to such extent as shall be necessary to maintain the qualification of the Trust Fund as a REMIC under the Code; provided that (i) there shall have been delivered to the Trustee an Opinion of Counsel to the effect that such action is necessary or advisable to maintain such qualification, and (ii) such amendment shall not have any of the effects described in paragraphs (a) through (c) of the proviso to Section 10.02. Section 10.02. Waivers and Supplemental Agreements With Consent of Holders. With the consent of the Holders of Certificates of each Class in the related Trust Fund having Certificate Principal Balances and Notional Principal Balances aggregating not less than 66% of the aggregate of the Certificate Principal Balances or Notional Principal Balances, as applicable, of all of the Certificates of such Class, (i) compliance by Farmer Mac with any of the terms of this Trust Agreement or the related Issue Supplement may be waived or (ii) Farmer Mac may enter into any Supplemental Agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Trust Agreement or the related Issue Supplement or of modifying in any manner the rights of the Holders of the Certificates issued under this Trust Agreement and the related Issue Supplement; provided that no such waiver or Supplemental Agreement shall: (a) without the consent of all Certificateholders affected thereby reduce in any manner the amount of, or delay the timing of, distributions which are required to be made on any Certificate; (b) without the consent of all Certificateholders (i) terminate or modify the Farmer Mac Guarantee with respect to the Certificates of such Series, or (ii) reduce the aforesaid percentages of Certificates, the Holders of which are required to consent to any waiver or any Supplemental Agreement; or (c) without the consent of the Holder of each Residual Certificate, adversely effect materially the rights of each such Holder, including, without limitation, which might have the effect of increasing any taxes payable by such Holders. It shall not be necessary for Holders to approve the particular form of any proposed Supplemental Agreement, but it shall be sufficient if such Holders shall approve the substance thereof. Promptly after the execution of any Supplemental Agreement pursuant to this Section, Farmer Mac shall give notice thereof to Holders of Certificates. Any failure of Farmer Mac to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Agreement. ARTICLE XI REMIC Provisions Section 11.01. REMIC Administration. (a) Unless otherwise specified in the Issue Supplement for a Series, the Closing Date shall be deemed to have been designated as the "startup day" of the related Trust fund within the meaning of Section 860(a)(9) of the Code. (b) The Holder of Certificates in a Series evidencing the largest percentage interest in the Class designated as the "residual interest" in the related REMIC shall be deemed to have designated the REMIC Administrator as the fiduciary in the performance of all the duties required of, or permitted to be taken by, the tax matters person for such REMIC and, if necessary, to execute a power of attorney to such effect. The REMIC Administrator, in such capacity, shall (i) act on behalf of the REMIC in relation to any tax matter or controversy involving the Trust Fund and (ii) represent the Trust Fund in any administrative or judicial proceeding relating to an examination or audit by any governmental taxing authority with respect thereto. The legal expenses, including without limitation attorneys' or accountants' fees, and costs of any such proceeding and any liability resulting therefrom shall be expenses of the Trust Fund and the REMIC Administrator shall be entitled to reimbursement therefor from _________________ unless such legal expenses and costs are incurred by reason of the REMIC Administrator's willful misfeasance, bad faith or gross negligence. (c) The REMIC Administrator shall prepare or cause to be prepared all of the Tax Returns that it determines are required with respect to the REMIC and deliver such Tax Returns in a timely manner to the Trustee and the Trustee shall sign and file such Tax Returns in a timely manner. The expenses of preparing such returns shall be borne by the REMIC Administrator without any right of reimbursement therefor. The REMIC Administrator agrees to indemnify and hold harmless the Trustee with respect to any tax or liability arising from the Trustee's signing of Tax Returns that contain errors or omissions. The Trustee and Farmer Mac shall promptly provide the REMIC Administrator with such information as the REMIC Administrator may from time to time request for the purpose of enabling the REMIC Administrator to prepare Tax Returns. (d) The REMIC Administrator shall provide (i) to any Transferor of a Residual Certificate such information as is necessary for the application of any tax relating to the transfer of a Certificate to any Person who is not a Permitted Transferee and, (ii) to the Trustee and the Trustee shall forward to the Certificateholders such information or reports as are required by the Code or the REMIC Provisions including reports relating to interest, original issue discount and market discount or premium. (e) The Farmer Mac and the REMIC Administrator shall take such actions and shall cause the REMIC created hereunder and the related Issue Supplement to take such actions as are reasonably within Farmer Mac's or the REMIC Administrator's control and the scope of its duties more specifically set forth herein as shall be necessary or desirable to maintain the status thereof as a REMIC under the REMIC Provisions (and the Trustee shall assist the Farmer Mac and the REMIC Administrator, to the extent reasonably requested by the Farmer Mac's and the REMIC Administrator to do so). Farmer Mac and the REMIC Administrator shall not knowingly or intentionally take any action, cause the REMIC to take any action or fail to take (or fail to cause to be taken) any action reasonably within its control and the scope of duties more specifically set forth herein, that, under the REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger the status of the related REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but not limited to the tax on prohibited transactions as defined in Section 860(a)(2) of the Code and the tax on contributions to a REMIC set forth in Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event") unless Farmer Mac or the REMIC Administrator, as applicable, has received an Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not, with respect to the REMIC created hereunder and the related Issue Supplement, endanger such status or, unless Farmer Mac or the REMIC Administrator, as applicable, determines in its sole discretion to indemnify the Trust Fund against such tax, result in the imposition of such a tax. The Trustee shall not take or fail to take any action (whether or not authorized hereunder) as to which Farmer Mac or the REMIC Administrator, as applicable, has advised it in writing that it has received an Opinion of Counsel to the effect that an Adverse REMIC Event could occur with respect to such action. In addition, prior to taking any action with respect to the REMIC or its assets, or causing the REMIC to take any action, which is not expressly permitted under the terms of this Agreement, the Trustee will consult with Farmer Mac or the REMIC Administrator, as applicable, or its designee, in writing, with respect to whether such action could cause an Adverse REMIC Event to occur with respect to the REMIC, and the Trustee shall not take any such action or cause the REMIC to take any such action as to which Farmer Mac or the REMIc Administrator, as applicable, has advised it in writing that an Adverse REMIC Event could occur. Farmer Mac or the REMIC Administrator, as applicable, may consult with counsel to make such written advice, and the cost of same shall be borne by the party seeking to take the action not expressly permitted by this Agreement. At all times as may be required by the Code, Farmer Mac will to the extent within its control and the scope of its duties more specifically set forth herein, maintain substantially all of the assets of the REMIC as "qualified mortgages" as defined in Section 860G(a)(3) of the Code and "permitted investments" as defined in Section 860G(a)(5) of the Code. (f) In the event that any tax is imposed on "prohibited transactions" of the REMIC created hereunder and the related Issue Supplement as defined in Section 860F(a)(2) of the Code, on "net income from foreclosure property" of the REMIC as defined in Section 860G(c) of the Code, on any contributions to the REMIC after the Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax laws, such tax shall be charged (i) to Farmer Mac, if such tax arises out of or results from a breach by Farmer Mac of any of its obligations under this Agreement or Farmer Mac has in its sole discretion determined to indemnify the Trust Fund against such tax or (ii) to the Trustee, if such tax arises out of or results from a breach by the Trustee of any of its obligations under this Article VIII. (g) The Trustee and Farmer Mac shall, for federal income tax purposes, maintain books and records with respect to the REMIC on a calendar year and on an accrual basis or as otherwise may be required by the REMIC Provisions. (h) Following the Startup Day, neither Farmer Mac nor the Trustee shall accept any contributions of assets to the REMIC unless Farmer Mac and the Trustee shall have received an Opinion of Counsel (at the expenses of the party seeking to make such contribution) to the effect that the inclusion of such assets in the REMIC will not cause the REMIC to fail to qualify as a REMIC at any time that any Certificates are outstanding or subject the REMIC to any tax under the REMIC Provisions or other applicable provisions of federal, state and local law or ordinances. (i) Neither Farmer Mac nor the Trustee shall enter into any arrangement by which the REMIC will receive a fee or other compensation for services nor permit the REMIC to receive any income from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted investments" as defined in Section 860G(a)(5) of the Code. (j) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity date" by which the Class Certificate Principal Balance of each Class comprising a Series shall be reduced to zero shall be the Distribution Date immediately following the second anniversary of the latest scheduled maturity of any Qualified Loan in the related Trust Fund. (k) Within 30 days after the Closing Date, the REMIC Administrator shall prepare and file with the Internal Revenue Service Form 8811, "Information Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of the Collateralized Debt Obligations" for the REMIC. Section 11.02. Indemnification. (a) The REMIC Administrator agrees to indemnify the Trust Fund, Farmer Mac and the Trustee for any taxes and costs (including, without limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust Fund, Farmer Mac or the Trustee, as a result of a breach of the REMIC Administrator's covenants set forth in this Article XI with respect to compliance with the REMIC Provisions, including without limitation, any penalties arising from the Trustee's execution of Tax Returns prepared by the REMIC Administrator that contain errors or omissions; provided, however, that such liability will not be imposed to the extent such breach is a result of an error or omission in information provided to the REMIC Administrator by Farmer Mac in which case Section 11.02(b) will apply. (b) Farmer Mac agrees to indemnify the Trust Fund, the REMIC Administrator and the Trustee for any taxes and costs (including, without limitation, any reasonable attorneys' fees) imposed on or incurred by the Trust Fund or the Trustee as a result of a breach of Farmer Mac's covenants set forth in this Trust Agreement or the related Issue Supplement, including without limitation, any penalties arising from the Trustee's execution of Tax Returns prepared by Farmer Mac that contain errors or omissions. (c) Farmer Mac agrees to hold harmless and indemnify the Holder of any Residual Certificate against any liability on account of any federal income tax (including interest and penalties) imposed on the related Trust Fund to the extent any such tax shall be paid or payable by it. ARTICLE XII Miscellaneous Section 12.01. Holders. The death or incapacity of any Holder of a Certificate shall not operate to terminate this Trust Agreement or any Issue Supplement, nor entitle such Holder's legal representative or heirs to claim an accounting or to take any action or proceeding in any court for a partition or winding up of the affairs of the related Trust Fund, nor otherwise affect the rights, duties and obligations of any of the parties to this Trust Agreement or any such Issue Supplement. No Holder shall have any right to control or to participate in the control and administration of any Trust Fund, nor shall any of the terms of this Trust Agreement or any such Issue Supplement be construed to constitute the Holders and Farmer Mac as partners or members of an association, nor shall any Holder have any duty or liability to any third person by reason of any action taken by the parties to this Trust Agreement or any such Issue Supplement pursuant to the provisions hereof and thereof. No Holder shall have any right by virtue of any provision of this Trust Agreement or any Issue Supplement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Trust Agreement or any Issue Supplement unless an Event of Default shall have occurred and be continuing in respect of the Trust Agreement and related Issue Supplement. For the protection and enforcement of the provisions of this Section, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Section 12.02. Reserve Banks as Agent. For each Regular Certificate, the appropriate Reserve Bank shall be considered to be acting as the agent of Farmer Mac in providing to and conferring upon the owners of the Regular Certificates, as such owners shall appear on the records of such Reserve Bank, the substantive rights and benefits which are provided for herein for Holders of Certificates. Accordingly, the substantive effect of all provisions herein providing rights and benefits to Holders of Regular Certificates, including, without limitation, provisions relating to distributions, voting and notices, shall apply to such record owners on the books of the Reserve Bank, through the appropriate Reserve Bank acting as agent for Farmer Mac. Section 12.03. Governing Law. The terms of this Trust Agreement and any Issue Supplement shall be construed in accordance with the laws of the District of Columbia. Section 12.04. Demands, Notices, Communications. All formal demands, notices and communications by and between Farmer Mac, the Trustee and the Holder of any Certificate shall be in writing and delivered in person or by first class mail, postage prepaid (a) if to Farmer Mac or the Depositor, to 919 18th Street, N.W., Washington, D.C. 20006, or to such other address as shall be set forth in a notification to Holders, or (b) if to the Trustee, the Certificate Registrar or the Transfer Agent to First Trust Center, 180 East Fifth Street, St. Paul, MN 55101, Attn: Vice President-Structured Finance or (c) if to the Holder of a Regular Certificate, to the appropriate Holder in care of the Reserve Bank at the address provided to Farmer Mac by such Reserve Bank or (d) if to the Holder of a Residual Certificate, to such Holder at the address shown in the Certificate Register. Any notice so mailed within the time prescribed in this Trust Agreement or any Issue Supplement shall be conclusively presumed to have been duly given whether or not the Holder receives such notice. Section 11.05. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Trust Agreement or any Issue Supplement shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Trust Agreement or any Issue Supplement and shall in no way affect the validity or enforceability of the other provisions of this Trust Agreement or any Issue Supplement or of the Certificates or the rights of the Holders thereof. IN WITNESS WHEREOF, the parties hereto hereby execute this Trust Agreement, as of the day and year first above written. FEDERAL AGRICULTURAL MORTGAGE CORPORATION SEAL] By_____________________________ Attest:________________________ FARMER MAC MORTGAGE SECURITIES CORPORATION [SEAL] By____________________________ Attest:_______________________ FIRST TRUST NATIONAL ASSOCIATION, as Trustee [SEAL] By____________________________ Attest:_______________________ EX-6 7 EXHIBIT 5.1 OPINION OF GENERAL COUNSEL OF THE REGISTRANT Farmer Mac Federal Agricultural Mortgage Corporation 919 18th Street, N.W., Suite 200 Washington, D.C. 20006 June 19, 1996 Farmer Mac Mortgage Securities Corporation 919 18th Street, N.W., Suite 200 Washington, D.C. 20006 Re: Form S-3 Registration Statement; File No. 33- Ladies and Gentleman: I am the Vice President and General Counsel of the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States ("Farmer Mac"), and, in that capacity, I have acted as counsel to Farmer Mac Mortgage Securities Corporation ("FMMSC"), a wholly owned subsidiary of Farmer Mac, in connection with the preparation and filing with the Securities and Exchange Commission of a registration statement on Form S-3 (the "Registration Statement") relating to the registration under the Securities Act of 1933 (the "1933 Act") of Guaranteed Agricultural Mortgage-Backed Securities (the "Securities"). The Securities are to be issued from time to time in series pursuant to a trust agreement to be dated as of June 1, 1996 (the "Trust Agreement") and entered into between Farmer Mac, FMMSC and First Trust National Association, as Trustee, as supplemented by an issue supplement thereto each time a series of Securities is issued (each, an "Issue Supplement"). In arriving at the opinions expressed below, I have made such legal and factual examinations and inquires, and have examined and relied upon the forms of prospectus and prospectus supplement (collectively, the "Prospectus") contained in the Registration Statement and originals or copies, certified or otherwise identified to my satisfaction, of such other certificates, corporate records, agreements and other instruments and documents, as I have deemed advisable or necessary for the purpose of rendering this opinion. In rendering the opinions expressed below, I have assumed and have not verified that the signatures on all documents that I have examined are genuine, that all copies of documents that I have examined conform to the originals thereof and that the originals thereof are authentic. Based upon the foregoing, it is my opinion that: Farmer Mac Mortgage Securities Corporation June 19, 1996 Page 2 of 2 1. When the Trust Agreement has been duly authorized by all necessary action and duly executed and delivered by Farmer Mac, FMMSC and the Trustee, the Trust Agreement will constitute a legal, valid and binding obligation of Farmer Mac and FMMSC, the enforcement of which will be subject to general principles of equity regardless of whether enforcement is sought in a proceeding in equity or at law. 2. When an Issue Supplement has been duly authorized by all necessary action and duly executed and delivered by Farmer Mac, FMMSC and the Trustee, and when the Securities of the related series have been duly executed, countersigned, issued and sold as contemplated in the Registration Statement, such Securities will be legally and validly issued, fully paid and nonassessable, and the holders of such Securities will be entitled to the benefits of the Trust Agreement and the Issue Supplement. 3. Pursuant to the Farmer Mac Guarantee, which is set forth in Article V of the Trust Agreement, Farmer Mac will guarantee payments on the Securities as and to the extent described in the Prospectus under "FARMER MAC GUARANTEE". The obligation of Farmer Mac under the Farmer Mac Guarantee will not carry the full faith and credit of the United States. I express no opinion other than as to the laws of the United States of America and the laws of the State of New York. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement. Very truly yours, Michael T. Bennett Vice President and General Counsel MTB/als EX-7 8 EXHIBIT 8.1 OPINION OF BROWN & WOOD AS TO TAX MATTERS June 19, 1996 Farmer Mac Mortgage Securities Corporation 919 18th Street, N.W. Washington, D.C. 20006 Re: Farmer Mac Mortgage Securities Corporation Registration Statement on Form S - 3 Ladies and Gentlemen: We have acted as special counsel to the Federal Agricultural Mortgage Corporation, a federally chartered instrumentality of the United States ("Farmer Mac"), and Farmer Mac Mortgage Securities Corporation, a wholly owned subsidiary of Farmer Mac (the "Registrant"), in connection with preparation of a Registration Statement on Form S-3 (the "Registration Statement"), filed with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933 (the "Act") for registration of certain Guaranteed Agricultural Mortgage - Backed Securities (the "Securities") issued pursuant to a Trust Agreement entered into among Farmer Mac, the Registrant and the trustee named therein. We have advised the Registrant with respect to certain federal income tax consequences of the proposed guarantee and sale of the Certificates. This advice is summarized under the headings "Summary of Terms - Certain Federal Income Tax Consequences: and "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus, which is part of the Registration Statement. Such description does not address the federal income tax consequences of the proposed guarantee and sale applicable to all categories of investors, but with respect to those tax consequences which are discussed, in our opinion, the description is accurate in all material respects. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to a reference to this firm under the heading "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" in the Prospectus forming a part of the Registration Statement, without implying or admitting that we are "experts" within the meaning of the Act or the rules and regulations of the Commission issued thereunder, with respect to any part of the Registration Statement, including this exhibit. Very truly yours, EX-8 9 EXHIBIT 23.1 CONSENT OF THE GENERAL COUNSEL OF THE REGISTRANT The consent of the General Counsel of the Registrant is contained in the opinion file as Exhibit 5.1 hereto. EX-9 10 EXHIBIT 23.2 CONSENT OF BROWN & WOOD The consent of Brown & Wood is contained in the opinion filed as Exhibit 8.1 hereto. EX-10 11 EXHIBIT 23.3 CONSENT OF KPMG PEAT MARWICK LLP The Board of Directors Federal Agricultural Mortgage Corporation We consent to the use of our report incorporated herein by reference and to the reference to our firm under the heading "Experts" in the Prospectus Supplement. Our report dated February 12, 1996, excpet as to Note 11, which is as of March 14, 1996, contains an explanatory paragraph regarding regulatory capital as described in Note 3 to the December 31, 1995 financial statements. KPMG Peat Marwick LLP Washington, D.C. June 19, 1996 EX-11 12 EXHIBIT 24.1 POWER OF ATTORNEY (INCLUDE IN II-3 OF THIS REGISTRATION STATEMENT -----END PRIVACY-ENHANCED MESSAGE-----