Thoughts on REMICs

Posted on Monday, April 27, 2009

Prepare for longer time and more complex circumstances
Factor in will be distressed
Assume won’t be able to refi at maturity
Permit change to interest, flexibility, cash flow changes
Allow mod without limiting type or magnitude – similar to what’s now allowed with residential
Changes to amount and timing of principal and interest payments (including partial loan forgiveness, amortization mods, prepayment recalculations, maturity date extensions and interest accruals if insufficient cash flow to support interest pmts).
Changes to collateral (additions, substitutions, releases) or conditions/prices to same.
Changes to obligors and guarantees (additions, substitutions, releases)
Changes to loan payment options (additions and deletions)
Changes to reserve and escrow payments
Changes to financial covenants
Changes/removal of lock-out terms and prepayment fees
Changes to permit addtl financing (mtg or mezz)
Changes to cash management/use of trapped funds
Changes to address rating related issues resulting from the crisis
Converting loans secured by multiple properties to one and visa versa
Provision to redistribution of cash flow among traunches

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