GINNIE MAE 5500.3, REV. 1 Prospectus Supplement (To Base Prospectus dated October 1, 2007) Government National Mortgage Association $ [nt of Issue][1] [Initial HECM M]% [2] Ginnie Mae II Home Equity Conversion Mortgage-Backed Securities Guaranteed as to the Timely Payment of Principal and Interest by the Government National Mortgage Association (Backed by the Full Faith and Credit of the United States) Issued by: [ - ] (the "Ginnie Mae Issuer") [3] Ginnie Mae Pool No.: Central Paying and Transfer Agent: The Bank of New York Issue Date: Number of Participations underlying the Securities: Depository: Final Distribution Date: The Federal Reserve Bank of New York Pool Stratification Tables: See Annex. Refer to the attached Annex for statistical information regarding the Home Equity Conversion Mortgage-Backed Securities. You should read the base prospectus and this prospectus supplement (collectively, the "prospectus"). Date: 10/01/07 1 Appendix IV-31 American LegalNet, Inc. www.FormsWorkflow.com The securities offered hereby (the "Securities" or "HECM MBS") provide for the timely payment of principal and accrued interest. Interest will accrue, commencing in the month of issuance, on the Securities at the per annum rate specified above. The accrued interest will not be paid to securityholders but will be added each month to the then outstanding principal amount of the Securities, and will be payable together with the original principal amount of the Securities as set forth in the related prospectus supplement to the extent such amount has not been paid no later than the Final Distribution Date. In general, any payments received in respect of any HECMs prior to the Final Distribution Date will be passed through pro rata to the respective holders of participation interests in the outstanding advances made to a borrower relating to the HECM. In addition, the Ginnie Mae Issuer is obligated to cover any interest shortfalls resulting from borrower prepayments. It is uncertain when payments will be made in respect of your Securities. The Government National Mortgage Association ("Ginnie Mae"), a wholly-owned corporate instrumentality of the United States of America within the U.S. Department of Housing and Urban Development, guarantees the timely payment of principal and interest on each Class of Securities. The Ginnie Mae guaranty is backed by the full faith and credit of the United States of America. The Securities are exempt from the registration requirements of the Securities Act of 1933, as amended, and are "exempted securities" within the meaning of the Securities Exchange Act of 1934, as amended. OVERVIEW OF THE SECURITIES AND THE UNDERLYING HECMs The Securities are based on or backed by participation interests in advances made to borrowers and related amounts (each, a "Participation") in respect of a HECM, also commonly referred to as a "reverse mortgage loan," insured by the Federal Housing Administration ("FHA"). Ginnie Mae guarantees the timely payment of principal and interest on the Securities. The Ginnie Mae guaranty is backed by the full faith and credit of the United States of America. The HECMs to which the Participations relate are mortgage loans designed specifically for senior citizens to convert equity in their homes to monthly streams of income or lines of credit. HECMs were originated or acquired by and will be serviced by the parties as set forth herein. No interest or principal is due by the borrower in respect of any HECM until maturity, which generally does not occur until after the occurrence of a Maturity Event. A Maturity Event generally occurs (i) if a borrower dies and the property is not the principal residence of at least one surviving borrower, (ii) a borrower conveys all of his or her title in the mortgaged property and no other borrower retains title to the mortgaged property, (iii) the mortgaged property ceases to be the principal residence of a borrower for reasons other than death and the mortgaged property is not the principal residence of at least one surviving borrower, (iv) a borrower fails to occupy the mortgaged property for a period of longer than 12 consecutive months because of physical or mental illness and the mortgaged property is not the principal residence of at least one other borrower, or (v) the failure by the borrower to perform any of its obligations under the HECM. However, interest accrues on the HECM at the applicable mortgage interest rate and is Date: 10/01/07 2 Appendix IV-31 American LegalNet, Inc. www.FormsWorkflow.com added each month to the outstanding principal balance of the HECM. A borrower may prepay in whole or in part the outstanding balance of a HECM at any time without penalty. See "General Introduction to HECMs" in the Base Prospectus. The Ginnie Mae Issuer is permitted and obligated to purchase (such obligation is referred to hereinafter as a "Mandatory purchase event") all Participations related to a HECM when the outstanding principal amount of the related HECM is equal to or greater than 98% of the "maximum claim amount." Furthermore, a Ginnie Mae Issuer may, at its option, purchase all Participations related to any HECM (such option is referred to hereinafter as a "98% Optional purchase event") to the extent that any borrower's request for an additional advance in respect of any HECM, if funded, together with the outstanding principal amount of the related HECM is equal to or greater than 98% of the "maximum claim amount." The "maximum claim amount" of a HECM is the lesser of the appraised value of the property or the maximum principal amount for a one-unit dwelling that HUD can lawfully insure in respect of forward mortgages in the geographical area as provided in Section 203(b)(2) of the National Housing Act. See "Financial Characteristics of HECMs-- Obligation of Ginnie Mae Issuer to Purchase Participations Related to Mortgage Loans in Limited Circumstances" and "--Optional Purchase of Participations Related to HECMs" in the Base Prospectus. In addition, a Ginnie Mae Issuer may, at its option, purchase all Participations related to a HECM that becomes, and continues to be, due and payable in accordance with its terms (such option is referred to hereinafter as a "Due and payable purchase event," and collectively with the Mandatory purchase event and the 98% Optional purchase event, a "Ginnie Mae Issuer purchase event"). In connection with any Due and payable purchase event or any 98% Optional purchase ev