Panel to Vote on Securitizing Reverses

The House Ways and Means Committee is scheduled to vote June 14 on a massive corporate tax bill that would make it easier to securitize reverse mortgages and addresses other securitization issues.One provision clarifies that reverse mortgages can be placed in a real estate mortgage investment conduit if the issuer "reasonably believes" the principal amount will be paid in full, which is not always the case with reverse mortgages. It is understood that the issuer can get an investment-grade rating to satisfy this reasonable-belief test. Another provision would stop holders of REMIC residuals with build-in losses from booking a double loss on the residual by transferring it to a subsidiary. The House bill does not include a deduction for mortgage insurance premiums, which the Senate included in its version of the corporate tax bill. But Rep. Paul Ryan, R-Wis., and other Ways and Means Committee members are expected to support the MI deduction when House and Senate leaders meet in conference to iron out a final bill. "He plans to push for it in conference," Rep. Ryan's press secretary Kate Dwyer said. The House bill also repeals a 1996 tax law that was supposed to create a more flexible REMIC, called a financial asset securitization investment trust.