How does a REMIC work?

REMICs piece together individual mortgages into pools based on risk and maturity, just like collateralized mortgage obligations (CMOs). They are divided into bonds or other securities that are then sold to investors. 1 These securities are traded on the secondary mortgage market.

How does REMIC lose value?

Foreclosure property loses its status if a lease creates certain kinds of rent income, if construction activities that did not begin before the REMIC acquired the property are undertaken, or if the REMIC uses the property in a trade or business without the use of an independent contractor and over 90 days after …

What is a REMIC bond?

REMICs, created by the Tax Reform Act of 1986, are multiclass, mortgage-backed securities in which cash flows from the underlying mortgage assets are allocated to individual bonds, called tranches, with different maturities, coupons and payment priorities thereby allowing greater flexibility in structuring bond classes …

Is Fannie Mae a REMIC?

Fannie Mae multifamily REMICs are structured transactions backed by MBS. Fannie Mae can also structure different classes of multifamily REMICs that are tailored to investor needs, making MBS/DUS-backed REMICs a highly desirable product for a variety of investors.

What does re REMIC stand for?

By Daniel Indiviglio. October 1, 2009. The Wall Street Journal today has an interesting article about a new type of security that it claims is taking Wall Street by storm. It’s called a “re-remic,” which stands for resecuritization of real-estate mortgage investment conduits.

What is a REMIC opinion?

REMIC Opinion means an opinion of outside tax counsel reasonably acceptable to Lender or the Rating Agencies to whom such opinion is addressed that a contemplated action will neither cause any trust formed as a REMIC pursuant to a Securitization to fail to qualify as a “real estate mortgage investment conduit” within …

What does re-REMIC stand for?

What is a re-REMIC?

Re-REMIC means Asset-Backed Securities the issuer of which is a REMIC (within the meaning of the Code) and whose holders are entitled to receive payments that depend entirely on the cash flow from one or more subordinated tranches of securities issued by other REMICs.

What is the primary advantage of a Remic?

What is a primary advantage of a REMIC? They are especially useful when a housing bubble bursts. They provide capital gains sheltering the investor.

What is a re Remic?

What is the primary advantage of a REMIC?

What is a resecuritization?

Resecuritization means a securitization which has more than one underlying exposure and in which one or more of the underlying exposures is a securitization exposure.

How does a REMIC work in the mortgage market?

A REMIC assembles mortgages into pools and issues pass-through certificates, multiclass bonds similar to a collateralized mortgage obligation (CMO), or other securities to investors in the secondary mortgage market. Mortgage-backed securities issued through a REMIC can be debt financings of the issuer or a sale of assets.

Is the real estate mortgage investment conduit ( REMIC ) tax exempt?

BREAKING DOWN ‘Real Estate Mortgage Investment Conduit (REMIC)’. REMICs are federally tax-exempt entities. Investors are still subject to individual income taxation. The tax-exempt status of an REMIC can be lost of a loan within its pool is exchanged for another loan. Federal regulations require that the loans in a given pool be constant.

How is a REMIC different from a real estate investment trust?

A REMIC, on the other hand, is exempt from federal tax. But that’s only on the income investors collect from the underlying mortgages at the corporate level. Any income generated and paid out to investors is taxable, using Form 1066 when filing a REMIC. 9 Real Estate Mortgage Investment Conduit (REMIC) vs. Real Estate Investment Trust (REIT)

What kind of investment vehicle is a REMICs?

REMICs are investment vehicles that hold commercial and residential mortgages in trust and issue securities representing an undivided interest in these mortgages.