Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
CONDUITS Their Structured and Risk by Peter J. Elmer* - First Conduit on back of a napkin over cocktains - BANCO Mortgage, Salmon Brothers - MGIC ... ... 1989 Tax Reform Act, GMAC-RFC ... - Peter J. Elmer is a senior financial economist in the FDIC's Division of Research and Statitstics. The author would like to thank Mark Iverson of GMAC-RFC for valuable assistance

CONDUITS Their Structured and Risk by Peter J. Elmer* - First Conduit on back of a napkin over cocktains - BANCO Mortgage, Salmon Brothers - MGIC ... ... 1989 Tax Reform Act, GMAC-RFC ... - Peter J. Elmer is a senior financial economist in the FDIC's Division of Research and Statitstics. The author would like to thank Mark Iverson of GMAC-RFC for valuable assistance

Ratings: (0)|Views: 6 |Likes:
Published by Mary Cochrane
Conduit - When is a Conduit Not a Conduit?
CONDUIT - buys loans or other financial assets from correspondents - goal repackaging and selling assets as securities - 'business' e.g. Norwest Mortgage Inc. specializes in securitizing loans and other types of financial assets.

A pure conduit minimizes its invovlements
Residential Funding Corp RFC, Wall Street brokers and dealers.

Conduits at expand by adding servicing or other functions to their core activities, such as GMAC-RFC during the 1990's can be difficult to classify - in practice - may be referred to as conduits.

Conduit lso used to describe other entities.

Example REMIC - bankruptcy-remote companies formed for special purpose of issuing securities that are effectively collaterlaized by loans or other assets held by the companies such as asset-backed commercial paper. These conduits act more like trusts or financial vehicles for issuing securities than independent organizations seeking a profit.

1986 Tax Reform Act - Real Estate Mortgage Investment Conduit (REMIC) another type of vehicle for structuring securities.

conduit appears in REMIC acronym, term REMIC has since been used to describe not only legal structures that elect to be REMICs but also the securities these structures issue.
These legal structures are generallynot taxed, and when their mortgage or MBS collaterla is paid off, their life is over. Thus, REMICs are best thought of as a special class of securities rather than on-going business enterprises.

That is, a REMIC is a conduit in name only, and shoudl not be confused with conduits formed as business enterprises focused on buying and securitizing loans.
Conduit - When is a Conduit Not a Conduit?
CONDUIT - buys loans or other financial assets from correspondents - goal repackaging and selling assets as securities - 'business' e.g. Norwest Mortgage Inc. specializes in securitizing loans and other types of financial assets.

A pure conduit minimizes its invovlements
Residential Funding Corp RFC, Wall Street brokers and dealers.

Conduits at expand by adding servicing or other functions to their core activities, such as GMAC-RFC during the 1990's can be difficult to classify - in practice - may be referred to as conduits.

Conduit lso used to describe other entities.

Example REMIC - bankruptcy-remote companies formed for special purpose of issuing securities that are effectively collaterlaized by loans or other assets held by the companies such as asset-backed commercial paper. These conduits act more like trusts or financial vehicles for issuing securities than independent organizations seeking a profit.

1986 Tax Reform Act - Real Estate Mortgage Investment Conduit (REMIC) another type of vehicle for structuring securities.

conduit appears in REMIC acronym, term REMIC has since been used to describe not only legal structures that elect to be REMICs but also the securities these structures issue.
These legal structures are generallynot taxed, and when their mortgage or MBS collaterla is paid off, their life is over. Thus, REMICs are best thought of as a special class of securities rather than on-going business enterprises.

That is, a REMIC is a conduit in name only, and shoudl not be confused with conduits formed as business enterprises focused on buying and securitizing loans.

More info:

Categories:Business/Law
Published by: Mary Cochrane on Jul 25, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

12/18/2013

pdf

text

original

 
CONDUITS: Their Structured and Risk by Peter J. Elmer*
Thursday, July 25, 201310:18 AM
General Page 1
 
General Page 2
 
General Page 3

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->