Jan. 1, 2005 marks the implementation of modifications in the American Jobs Creation Act 2004 relating to REMIC rules permitting the securitization of HELOC loans and reverse mortgages. Analysts speculated that the recent changes are expected to increase the flow of funds to HELOC borrowers.

Thacher Proffitt & Wood LLP said that prior to the modifications, existing rules made REMIC securitization of HELOCs economically disadvantageous, if not impossible. A crucial change in the new Act is the expansion of the definition of a qualified mortgage to accommodate HELOCs, reverse mortgage loans and any periodic advances.

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