7693 / What is a “REMIC?”

A REMIC is a “real estate mortgage investment conduit.” In general, a REMIC is a fixed pool of real estate mortgages that issues multiple classes of securities backed by the mortgages and that has elected to be taxed as a REMIC. It can issue several different classes of “regular interests” and must issue one (and only one) class of “residual interests.”¹ A regular interest is a debt obligation (or is treated as one) and a “residual interest” participates in the income or loss of the REMIC.² A REMIC is not treated as a separate taxable entity (unless it engages in certain prohibited transactions); instead, the income is taxable to the interest holders as explained in Q 7694.³

Generally, entities that do not qualify as REMICs, but that issue multiple maturity debt obligations, the payments on which are related to payments on the mortgages and other obligations held by the entity, are classified as Taxable Mortgage Pools (TMPs).⁴ (Domestic building and loan associations are not considered TMPs.) TMPs are taxed as corporations.⁵

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1.   IRC § 860D.

2.   IRC §§ 860B, 860C.

3.   IRC §§ 860A, 860F(a)(1).