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A corporate investor's guide to REMICs and CMOs
Author(s) -
Siegel Robert S.,
Baskin Dorsey L.
Publication year - 1991
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.3970030104
Subject(s) - securitization , business , finance , real estate , collateralized debt obligation , structured finance , financial system , asset (computer security) , economics , financial crisis , collateral , computer security , computer science , macroeconomics
Increasing numbers of investors have been getting involved in the secondary mortgage market by purchasing asset‐backed securities, including investments in real estate mortgage investment conduits and collateralized mortgage obligations. Although securitization is an evolving area, pledging expected asset cash flow to raise funds has become standard practice. Several factors have led to the popularity of securitization, namely, an ability to quantify and minimize the risk, assignment of independent credit ratings, and enhanced after‐tax rates of return when compared to comparable credit‐risk investments. This article discusses the economics of these investments, as well as the appropriate accounting and tax treatments.