RESIDENTIAL FUNDING MORTGAGE SECURITIES I, INC.
Company
RESIDENTIAL FUNDING CORPORATION
Master Servicer
Mortgage Pass-Through Certificates
Series 1996-S10
$6,309,708.94 (1) 0.00% Rate (2) Class A-8 Certificates
Supplement dated August 16, 1996
to
Prospectus Supplement dated May 22, 1996
and
Prospectus dated January 23, 1996
as Supplemented by the
Prospectus dated June 21,1996
(1) The Certificate Principal Balance of the Principal Only Certificates after
giving effect to the distribution on August 25, 1996.
(2) The Class A-8 Certificates are Principal Only Certificates and are not
entitled to receive distributions of interest.
THIS SUPPLEMENT MUST BE DELIVERED TOGETHER WITH THE PROSPECTUS AND PROSPECTUS
SUPPLEMENT REFERRED TO ABOVE, AND SHOULD BE READ IN CONJUNCTION THEREWITH.
DONALDSON, LUFKIN & JENRETTE
The Class A-8 Certificates (the "Principal Only Certificates") will be
purchased from the Company by Donaldson, Lufkin & Jenrette (the "Underwriter"),
pursuant to an agreement (the "Underwriting Agreement") among the Company, the
Master Servicer and the Underwriter. The proceeds to the Company from the sale
of the Principal Only Certificates will be equal to $3,874,555.65 net of any
expenses payable by the Company. The Underwriter intends to offer the Principal
Only Certificates from time to time to the public in negotiated transactions or
otherwise at varying prices to be determined at the time of sale. The
Underwriter may effect such transactions by selling the Principal Only
Certificates to or through dealers. In connection with the purchase and sale of
the Principal Only Certificates, the Underwriter and any dealers that may
participate with the Underwriter in such resale of the Principal Only
Certificates may be deemed to have received compensation from the Company in the
form of discounts or commissions or, in the case of such dealers, compensation
from the Underwriter in the form of discounts, concessions or commissions. The
Underwriting Agreement provides that the Company will indemnify the Underwriter
against certain civil liabilities under the Securities Act of 1933, or
contribute to payments required to be made in respect thereof. There is
currently no secondary market for the Principal Only Certificates. There can be
no assurance that an active secondary market will develop, or if it does
develop, that it will continue.
The Mortgage Pool consists of 1,844 Mortgage Loans with an outstanding
aggregate principal balance as of August 1, 1996 (the "Reference Date"), after
deducting payments of principal due on such date, of $532,586,459.20
As of the Reference Date, the weighted average Mortgage Rate of the
Discount Mortgage Loans was approximately 7.5651458618%. As of the Reference
Date, the weighted average Servicing Fee Rate of the Discount Mortgage Loans was
approximately 0.2989041262%. As of the Reference Date, the weighted average
remaining term to maturity of the Discount Mortgage Loans was approximately 354
months.
As of the Reference Date, the aggregate principal balance of the
Discount Mortgage Loans was $202,443,394.45. As of the Reference Date, the
aggregate principal balance of the Discount Mortgage Loans was equal to 99.47%
of the aggregate principal balance of the Discount Mortgage Loans as of the
Cut-off Date.
As of the Reference Date, 2.1% of the Mortgage Loans (by aggregate
principal balance) were delinquent by one month. As of the Reference Date, 0.2%
of the Mortgage Loans (by aggregate principal balance) were delinquent by two
months. None of the Mortgage Loans were three or more months delinquent or in
Foreclosure or will have been Real Estate Owned.
Because the amounts payable to the Principal Only Certificates
generally derive only from principal payments on the Discount Mortgage Loans,
the Principal Only Certificates are particularly sensitive to the rate and
timing of principal prepayments on the Discount Mortgage Loans. See "Certain
Yield and Prepayment Considerations" in the Prospectus Supplement.
The following table indicates the sensitivity of the pre-tax yield to
maturity on the Principal Only Certificates to various constant rates of
prepayment by projecting the monthly aggregate payments of principal on the
Principal Only Certificates and computing the corresponding pre-tax yields to
maturity on a corporate bond equivalent basis, based on the assumptions
described in (ii), (iii), (iv), (v), (vii) and (viii) in the third paragraph
preceding the table entitled "Percent of Initial Certificate Principal Balance
Outstanding at the Following Percentages of SPA" under the heading "Certain
Yield and Prepayment Considerations<254>General" in the Prospectus Supplement
attached, and assuming further that the assumptions described in (i) of the
paragraph referred to above were calculated based on information as of the
Reference Date and that the Principal Only Certificates will be purchased on
August 20, 1996 and payments on the Principal Only Certificates will be received
on the 25th day of each month commencing September 25, 1996. The assumed
purchase price of the Principal Only Certificates is $3,912,020.
Any differences between such assumptions and the actual
characteristics and performance of the Mortgage Loans and of the Principal Only
Certificates may result in yields being different from those shown in such
table. Discrepancies between assumed and actual characteristics and performance
underscore the hypothetical nature of the table, which is provided only to give
a general sense of the sensitivity of yields in varying prepayment scenarios.
Pre-Tax Yield to Maturity of the Principal Only
Certificates at the Following
Percentages of SPA
Assumed
Purchase
Price 0% 100% 200% 300% 400% 500%
$3,912,020 2.5% 4.9% 7.7% 10.7% 13.7% 16.6%
UNTIL NOVEMBER 14, 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE PRINCIPAL
ONLY CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS (INCLUDING THE PROSPECTUS SUPPLEMENT AND THIS
SUPPLEMENT). THE DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
