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Loan and Mortgage Terms Glossary |
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Real Estate Mortgage Investment Conduit (Remic):
A entity through which an issuer can sell multiple class securities with call protection to investors. A remic may be a corporation, trust, association, or partnership, but in order to qualify, it must confine its investments to mortgages, cash, government securities, foreclosure property acquired in connection with imminent default of a mortgage, or other remics. Typically, a remic invests in a pool of mortgages, and sells interests in those mortgages through securities with one or more senior classes and a subordinated class that assumes the credit risk of defaults and delinquencies. This creates a form of self-insurance that increases the investment ratings for the senior securities. A remic does not keep its mortgage assets on its books, but sells them to investors through its securities.
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