Deutsche Bank's loan facility to Five Ten Capital, an asset manager based in California, will be facilitating the creation of a REO-to-rental bond. This is the first ever transaction done where the bond are backed by actual mortgages instead of a so-called equity pledge.

Under these circumstances, a REMIC or real estate mortgage investment conduit is created. This would allow the company to purchase more single family homes and this kind of financing helps in the development of the emerging ABS class as the mortgage would be the basis for the formation of a REMIC.

REMICS, formerly known as CMBS, allows for the pooling together of a diverse set of loans from differnt origins to offer the flexibiloty in the assemblage of a security.

In this facility by Deutsche Bank, the backing is made by mortgage loans recorded against underlying properties. While this is a common practice, this has become more advantegeous as it allows for securitization of rental cashflows in a REMIC. When this is pooled with other debt assets from real estate loans, then a bond can be sold for this asset in the market.