CRT-Eligible Profile Summary
CAS: Summary of Key Tax, Legal and
Regulatory Considerations (cont.)
Topic
Sale of B Piece
CFTC/Commodity Pool
Operator (CPO)
Investment Company
Act of 1940
Volcker Rule
ERISA Eligibility
CAS Direct Debt
B piece is generally subject to 30% withholding tax if sold
to non-U.S. investors.
Registration as a CPO is not required.
Fannie Mae, as an instrumentality or 'government entity'
of the United States, is exempt from registration pursuant
to Section 2(b) of the Act.
Exempt from the 1940 Act since Fannie Mae is the issuer.
Securities are exempt from Volcker Rule since they are not
issued in reliance upon an exemption under Section
3(c) (1) or 3(c)(7) of the 1940 Act.
Non-rated and below investment grade rated notes are
ERISA eligible because they represent either (i) debt for
tax or (ii) equity in an operating company (Fannie Mae).
CAS REMIC
B piece is treated as debt-for-tax and therefore NOT subject to
withholding tax if sold to overseas investors.
Registration as a CPO is not required.
As an entity wholly owned by Fannie Mae, the SPV is exempt
from registration pursuant to Section 2(b) of the Act.
The SPV will be exempt from the Act pursuant to Section 2(b).
CAS REMIC notes therefore will not constitute interests in a
"covered fund" for purposes of the Volcker Rule since the
Volcker Rule applies only to securities issued in reliance on
Sections 3(c) (1) or 3(c)(7) of the Act.
The M1 and M2 notes will be ERISA-eligible because they are
both able to meet certain criteria to be characterized as debt-
for-tax independent of the REMIC election. In 2023 issuances,
the B1 bond is not expected to be ERISA-eligible.
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