What does REMIC stand for?

real estate mortgage investment conduit
The term real estate mortgage investment conduit (REMIC) refers to a special purpose vehicle (SPV) or debt instrument that pools mortgage loans together and issues mortgage-backed securities (MBS).

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. They offer stability with the variety of mortgages they contain.

How does a REMIC bonds lose value?

Investors can buy those bonds and either hold onto them or sell them to someone else. If they do chose to hold on to them, they will receive interest payments every month. The bonds’ worth is derived from the mortgages within the pool. As soon as the mortgages are paid off, the bonds lose value.

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 are REMIC rules?

Under the REMIC rules, in order for a securitization vehicle to qualify as a REMIC, among other requirements, its assets must consist of “qualified mortgages” and “permitted investments” (which include certain cash flow investments, qualified reserve assets and foreclosure property) (collectively, “qualifying assets”).

What is a REMIC account?

A real estate mortgage investment conduit (REMIC) is “an entity that holds a fixed pool of mortgages and issues multiple classes of interests in itself to investors” under U.S. Federal income tax law and is “treated like a partnership for Federal income tax purposes with its income passed through to its interest …

Is Fannie Mae a REMIC?

As with Fannie Mae REMICs backed by single-family MBS, Fannie Mae REMICs backed by multifamily MBS are created with customized cash flows that can meet the needs of a wide range of investors. REMICs take the principal and interest from underlying collat- eral and allocate these cash flows to different classes.

What is rescission period?

The right of rescission is the right of a borrower to cancel a home equity loan, line of credit or refinancing agreement within a 3-day period without financial penalty. You should know if a loan includes a rescission period. The right of rescission is limited to refinances, HELOCs and home equity loans.

What is the difference between a CMO and MBS?

A collateralized mortgage obligation, or CMO, is a type of MBS in which mortgages are bundled together and sold as one investment, ordered by maturity and level of risk. A mortgage-backed security, or an MBS, is a kind of asset-backed security that represents the amount of interest in a pool of mortgage loans.

Are REMICs CMOs?

REMICs are sometimes referred to as CMOs, or Collateralized Mortgage Obligations. Freddie Mac began issuing REMICs in March 1988 and issued the first REMIC backed by Gold PCs in October 1990.