What is the difference between a REMIC and a CMO?
What will be an ideal response?
All three entities (Ginnie Mae, Fannie Mae, and Freddie Mac) that issue agency pass-through securities also issue CMOs, with Ginnie Mae being a late entry into the market, issuing its first CMO in 1994 . The CMOs are not referred to not as CMOs by these issuers. They are referred to as REMICs or REMIC structures. REMIC means Real Estate Mortgage Investment Conduit and is a provision in the Tax Reform Act of 1986 . This provision in the tax law allows the efficient creation of a CMO structure. Consequently, issuers, both agency and nonagency issuers, structure their CMO deals so as to qualify for REMIC tax treatment. Rather than referring to this multiclass mortgage structure as a CMO, the preference is to refer to it as a REMIC.
You might also like to view...
Which of the following is a highly popular technique for creating a data model with which thedevelopers describe the content of a database by defining what is to be stored in the database andthe associations among them?
A) entity-relationship (E-R) data model B) Unified Modeling Language (UML) C) object-relational model D) semantic data model
Which of the following is not an assumption underlying cost-volume-profit analysis?
A) The break-even point will be passed during the period. B) Total sales and total costs can be represented by straight lines. C) Costs can be accurately divided into fixed and variable components. D) The sales mix is constant.