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Simple English definitions for legal terms
REMIC
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A quick definition of REMIC:
Term: REMIC
Definition: REMIC stands for Real Estate Mortgage Investment Conduit. It is a type of investment that allows people to invest in a pool of mortgages. This means that instead of buying one mortgage, you can buy a share of many mortgages. It is a way for people to invest in real estate without actually owning property.
A more thorough explanation:
Definition: REMIC (pronounced rem-ik or ree-mik) is an abbreviation for Real Estate Mortgage Investment Conduit. It is a type of investment vehicle that allows investors to pool together mortgages and issue securities backed by those mortgages.
Example: A bank may create a REMIC by pooling together a group of mortgages and selling securities backed by those mortgages to investors. The investors receive payments based on the interest and principal payments made by the homeowners whose mortgages are included in the pool.
Explanation: The example illustrates how a REMIC works by showing how mortgages are pooled together and used to create securities that are sold to investors. The investors receive payments based on the performance of the underlying mortgages, which can provide a steady stream of income. REMICs are often used by banks and other financial institutions to manage their mortgage portfolios and generate additional revenue.