real estate mortgage investment conduit

Real Estate Mortgage Investment Conduit (REMIC)

A pass-through tax entity that can hold mortgages secured by any type of real property and can issue multiple classes of ownership interests to investors in the form of pass-through certificates, bonds, or other legal forms. A financing vehicle created under the Tax Reform Act of 1986.

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Real Estate Mortgage Investment Conduit

The most common type of mortgage-backed security. A REMIC entitles the owner to a claim on the principal and interest payments on the particular mortgages underpinning the security. REMICs pay an interest rate that is usually related to the interest rates the homeowners are paying on their mortgages. The equivalent of the coupon on a mortgage-backed security is a percentage of the interest and principal paid on the mortgages backing the security. REMICs can take different legal forms: trusts, partnerships, and assets without a legal status. They qualify for special tax treatment. REMICs were established by the Tax Reform Act of 1986.

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real estate mortgage investment conduit (REMIC)

A type of pass-through mortgage-backed security established in the Tax Reform Act of 1986. REMICs can vary in both maturity and risk and are backed by mortgage or participation loans.

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real estate mortgage investment conduit (REMIC)

An entity that holds a fixed pool of mortgages and issues multiple classes of mortgage backed securities.All interests must be classified as regular or residual. Regular interests are entitled to principal and interest income, through bonds, stock, or some other vehicle.Residual interests provide income that is less certain.There are almost 50 different classes of certificates,all with varying rights and risks.The Freddie Mac Web site has an excellent discussion of all available certificate types at www.freddiemac.com/mbs/docs/remic_glossary.pdf.