Dirt Lawyers, Dirty REMICs | The Borden / Reiss Duo on ATTACK Yet Again


Dirt Lawyers, Dirty REMICs

Bradley T. Borden
Brooklyn Law School

David J. Reiss
Brooklyn Law School

January 31, 2013

Probate & Property May/June 2013, Forthcoming

Brooklyn Law School, Legal Studies Paper No. 322


It is appropriate that the day-to-day practice of real estate law did not touch on the intricacies of the securitization of mortgages, let alone the tax laws that apply to mortgage-backed securities. Securitization professionals did not, however, account for the day-to-day practices of real estate lawyers as they relate to the transfer and assignment of mortgage notes and mortgages when structuring mortgage-backed securities. The consequences of this may turn out to be severe for investors, underwriters, and securitization professionals.

One of the consequences of the sale of a negotiable note not done in accordance with the requirements of the holder in due course doctrine is that the purchaser of the note may not be free of the personal defenses that the note maker (borrower) would have had against the original lender. Another consequence of the sale of a note that is not done properly is that the beneficial owner (as opposed to the legal owner) may not be able to collect on the debt if the borrower is in default. And a third – and until recently hidden — consequence of an improper sale of a note to a secondary market participant is that the purchaser may fail to comply with requirements necessary to obtain favorable tax treatment as a Real Estate Mortgage Investment Conduit, a REMIC.

Copy of the paper below…




 Dirt Lawyers, Dirty REMICs

One Response to “Dirt Lawyers, Dirty REMICs | The Borden / Reiss Duo on ATTACK Yet Again”
  1. ,Good work, good read. The more we learn the less important in my case (#179390507) Bank of America appears to me as ruthless thugs in the office of the Pres. of BofA

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