SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
March 24, 1997
Farmer Mac Mortgage Securities Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-6325 55-1779791
(State or Other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation
919 18th Street, N.W. 20006
Washington, D.C. (Zip Code)
(Address of Principal
Executive Offices)
Registrant's telephone number, including area code (202) 872-7700
No Change
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. OTHER EVENTS
A. The Registrant registered issuances of Guaranteed
Agricultural Mortgage-Backed Securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Act"), by a Registration Statement on Form
S-3 (Registration File No. 333-6325) (the "Registration
Statement"). This Current Report on Form 8-K is being filed to
supplement the Registration Statement with the following
language:
In connection with an offering of Certificates by
a Trust Fund as to which no REMIC election is to be
made, investors should note the following: (i) the
"reserve method" of accounting for bad debts provided
for in Code Section 593 has been repealed for tax years
beginning after December 31, 1995; thus the treatment
of a Certificate as representing "qualifying real
property loans" within the meaning of that Code Section
is no longer applicable to an investment in
Certificates by a financial institution; (ii) in the
event the Trust Fund is created with a single class of
Grantor Trust Certificates, no prepayment assumption
should be used in the computation of OID, market
discount or amortizable premium with respect to a
Certificateholder's interest in the Qualified Assets
underlying a Certificate; (iii) a Qualified Loan could
be issued with OID in the event of the financing of
points or other charges by the Originator of the
Qualified Loan in an amount greater than the
statutorily defined de minimis amount to the extent
that the points are not for services provided by the
lender, regardless of whether the points are currently
deductible by the borrower; (iv) because of the absence
of clear authority, it is uncertain whether the portion
of any Prepayment Premium or Yield Maintenance Charge
received by any Certificateholder should be treated as
capital gain (assuming a Certificate is held as a
capital asset) or as ordinary income
(Certificateholders that receive distributions from the
Trust Fund of Prepayment Premiums or Yield Maintenance
Charges should consult their tax advisors regarding the
taxable status of such amounts); and (v) in the event
the Trust Fund is treated for federal income tax
purposes as created with more than one class of Grantor
Trust Certificates, it is unclear under what
circumstances, if any, the prepayment of a Qualified
Loan will give rise to a loss to the holder of a
Grantor Trust Certificate that is treated as a Stripped
Bond Certificate purchased at a premium or as a
Stripped Coupon Certificate. If a Stripped Bond
Certificate is treated as a single instrument (rather
then as an interest in discrete Qualified Loans) and
the effect of prepayments is taken into account in the
computation of OID with respect to such Certificate
(the "Prepayment Assumption Rule"), it appears that no
loss will be allowable as a result of any particular
prepayment, and instead, a prepayment should be treated
as a partial payment of the stated redemption price of
the Stripped Bond Certificate and accounted for under
the Prepayment Assumption Rule. However, if a Stripped
Bond Certificate is treated as an interest in discrete
Qualified Loans, then when a Qualified Loan is prepaid,
the holder of such Certificate should recognize a loss
equal to the excess of the portion of the holder's
adjusted basis for such Certificate allocable to such
Qualified Loan over the amount of principal prepaid.
If a Stripped Coupon
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Certificate is treated as a single instrument and the
Prepayment Assumption Rule applies, it appears that a
loss would be available, if at all, as a result of a
particular prepayment, only if prepayments on the
Qualified Loans occur at a rate faster than the assumed
prepayment rate. However, if a Stripped Coupon
Certificate is treated as an interest in discrete
Qualified Loans, then when a Qualified Loan is prepaid,
the holder of such Certificate should recognize a loss
equal to the portion of the holder's adjusted basis for
such Certificate allocable to such Qualified Loan. If
a Stripped Bond Certificate or Stripped Coupon
Certificate is treated as a single instrument but the
Prepayment Assumption Rule does not apply, it appears
that no loss will be allowable as a result of any
particular prepayment, and a Certificateholder would be
entitled to a loss only upon receiving a final payment
with respect to such Certificate that is less than such
Certificateholder's remaining adjusted basis for such
Certificate.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
FARMER MAC MORTGAGE SECURITIES
CORPORATION
By:
Name: Christopher Dunn
Title: Vice President
Dated: March 24, 1997
