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
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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
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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--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% 4.8% 7.6% 10.5% 13.3% 16.1%
UNTIL NOVEMBER 18, 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.
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