FASIT: The New Financing Tool

By Moreo, Phoebe | Journal of Property Management, September/October 1997 | Go to article overview

FASIT: The New Financing Tool


Moreo, Phoebe, Journal of Property Management


The Small Business Job Protection Act of 1996 included, among other things, the establishment of the Financial Asset Securitization Investment Trust (FASIT), a new means of securitizing assets that is similar in intent but goes beyond the Real Estate Mortgage Investment Conduit (REMIC) tool currently used by the real estate industry to tap Wall Street investment capital. When the federal enabling legislation goes into effect this September, the first FASITs are expected to be used to securitize several asset classes, including credit card receivables, auto receivables, and real estate mortgages.

FASITs are not expected to replace other financing tools but will provide an alternative that has significant advantages over the REMIC. FASITs will provide more flexibility in financing owners' projects as well as in developing, selling, or restructuring assets in a portfolio.

More Loans and Flexibility The introduction of FASITs creates new opportunities in the commercial mortgage-backed securities (CMBS) market for financing in all types of commercial real estate. For example, construction financing, recently difficult to obtain and generally not eligible for REMIC securitization, can now be facilitated using a FASIT, thus potentially creating greater liquidity in the construction-loan market.

Short-term commercial financing, such as interim loans and bridge loans, can also be placed in a FASIT with greater efficiency and at a lower cost than using a REMIC structure because the FASIT has the capability to remove or take in additional assets in cases of over-collateralization.

If, for example, a shopping center owner needs to develop and finance a pad site separately from the other property due to over-collateralization, the pad can be pulled out of the overall FASIT structure and sold, developed, or financed in a new way. Under the REMIC structure, an asset change incurs higher costs because the original REMIC has to be killed and a completely new one formed if the assets need to be used differently.

FASITs also provide a mechanism for managing interest-rate and prepayment risks. Portfolios of debt instruments that have defined patterns of principal amortization can be pooled with instruments that have erratic principal amortization in order to smooth interest earnings and make it easier to track and maintain a benchmark rate of return within a defined duration range. Mortgages can be added as needed, thereby eliminating prepayment risk to the investor.

FASITs can also hold hedging instruments such as swaps, options, and futures.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

FASIT: The New Financing Tool
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.