REAL-ESTATE-MORTGAGE INVESTMENT CONDUIT
real-estate-mortgage investment conduit.An entity that holds a fixed pool of mortgages or
mortgage-backed securities (such as collateralized mortgage obligations), issues interests in itself
to investors, and receives favorable tax treatment by passing its income through to those investors.
- Real-estate-mortgage investment conduits were created by the Tax Reform Act of 1986. They
can be organized as corporations, partnerships, or trusts. To qualify for tax-exempt status, the
entity must meet two requirements: (1) almost all the entity’s assets must be real-estate mortgages
(though a few other cash-flow-maintaining assets are allowed); and (2) all interests in the entity
must be classified as either regular interests (which entitle the holder to principal and interest
income through debt or equity) or residual interests (which provide contingent income). — Abbr.
REMIC. [Blacks Law 8th]