conduit financing

Conduit Financing

A type of financing in which a government or private company issues debt on behalf of a non-profit organization. The debt is guaranteed by the revenue the project that the debt finances generates. Conduit financing is used for the non-profit's capital expenditures.

conduit financing

A method of providing loan money through a debt instrument that blends features of a traditional pass-through mortgage security and a bond.Traded on Wall Street as securities known as REMICs—real estate mortgage investment conduits.For real estate borrowers, the single most important feature of conduit financing is the very large prepayment penalty imposed on all such transactions.The success of the entire securitization process depends upon trustee receipt of regular monthly income for distribution to bondholders according to a prearranged schedule. If a borrower pays off the loan early,that loan will no longer earn any interest,which affects the money available for payment to investors. In order to compensate, the trustee will have to go out into the marketplace and purchase an investment to replace the mortgage paid off. That investment may cost a premium price,so the prepayment penalty is used to offset the premium.

References in periodicals archive ?
John was in private practice in Des Moines for 20 years prior to his move to De Lage Landen representing commercial banks and other lenders in asset based lending, securitizations, secured and unsecured commercial lending and consumer finance transactions involving various structures and serving as bond counsel and underwriter, issuer, and borrower counsel in traditional government financing and conduit financing transactions.
Bob McDonnell to the Virginia College Building Authority, which provides financing for capital projects and educational equipment for state higher education institutions and a conduit financing mechanism for private, nonprofit higher education institutions.
The five-year conduit financing was provided by Natixis Real Estate Capital LLC and features interest-only payments for the full term.
Under the regulations, the "conduit company" is defined as "an intermediate entity whose participation in a financing arrangement may be disregarded in whole or in part" (87) and a "conduit financing arrangement" is defined as a financing arrangement effectuated through one or more conduit entities.
Similarly, under the conduit financing regulations, the IRS has the authority to disregard, for purposes of [section] 881, the participation of one or more intermediate entities in a "financing arrangement" where the entities are acting as conduit entities.
Conduit financing: Bonds are issued by a nonprofit entity and the city makes lease payments to the nonprofit, which uses the money to service the debt.
The court held that the nature of the institution is irrelevant and that the conduit financing advanced a governmental interest without creating the impression that the government was endorsing religion.
McNair, (34) the Supreme Court held that a revenue bond issuance benefiting a sectarian institution did not violate the Establishment Clause, (35) but noted that conduit financing would have the effect of advancing religion when used to fund a loan for a pervasively sectarian institution.
The taxable years at issue in the TAMs were 1990-1994, which precede the final conduit financing regulations issued pursuant to Sec.
On October 11, 1994, the IRS issued the first part of proposed regulations on conduit financing arrangements under IRC section 7701(l).
The final key provision for multi-nationals authorizes regulations to be issued to attack conduit financing arrangements where a U.S.
An illustration of the ability of a high-volume mortgage intermediary like Meridian to deliver conduit financing for relatively small loans is our deal on 239 Knickerbocker Avenue in Brooklyn.