Fannie, Freddie Propose Changes to REMIC Structure to Attract REIT Investors

According to recent releases, both Fannie Mae and Freddie Mac are proposing changes to their CRT issuance in order to make such products more attractive to real estate investment trust (REIT) investors. Fannie Mae issued a press release, fact sheet, and FAQs detailing a new structure for its Connecticut Avenue Securities (CAS). In the FAQs, Fannie Mae writes that they will "structure future CAS offerings as notes issued by a trust that qualifies as Real Estate Mortgage Investment Conduits (REMICs). Fannie Mae would facilitate this change by making a REMIC tax election on a majority of single-family loans that we acquire and guarantee." Meanwhile, Global Capital reports that Freddie Mac is considering changes to its structured agency credit risk (STACR) transactions, which would potentially open up the market to much bigger participation from REIT investors.

SFIG applauds this move, and believes that the GSEs CRT should be a "good" REIT asset as defined under IRS and SEC regulations. SFIG, as we have done in this instance, will continue to work with policy makers and industry stakeholders to increase the availability of private capital in the housing finance market.

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