Schedule L, Balance Sheets per Books

The amounts shown should agree with the REMIC’s books and records. Attach a statement explaining any differences.

Line 1a—Cash flow investments. These are any investments of amounts received under qualified mortgages for a temporary period (not more than 13 months) before distribution to holders of interests in the REMIC.

Line 1b—Qualified reserve assets. The term “qualified reserve asset” means any intangible property that is held for investment and as part of a qualified reserve fund. For a definition of qualified reserve fund, including exceptions, see sections 860G(a)(7)(B) and (C).

Line 1c—Foreclosure property. This is any real property (including interests in real property), and any personal property incident to such real property, acquired by the REMIC as a result of the REMIC’s having bid in the property at foreclosure, or having otherwise reduced the property to ownership or possession by agreement or process of law, after there was a default or imminent default on a qualified mortgage held by the REMIC.

8 Instructions for Form 1066 (2025)

Generally, this property ceases to be foreclosure property at the close of the third tax year following the tax year in which the REMIC acquired the property. See sections 860G(a)(8) and 856(e), and Regulations section 1.856-6 for more details.

Note: Solely for purposes of section 860D(a), the determination of whether any property is foreclosure property will be made without regard to section 856(e)(4).

Line 7—Regular interests. These are interests in the REMIC that are issued on the startup day with fixed terms and that are designated as regular interests, if:

1. Such interest unconditionally entitles the holder to receive a specified principal amount or other similar amounts; and

2. Interest payments (or similar amounts), if any, with respect to the interest at or before maturity are payable based on a fixed rate (or at a variable rate described in Regulations section 1.860G-1(a)(3)), or consist of a specified portion of the interest payments on qualified mortgages and this portion doesn’t vary during the period that the interest is outstanding.

The interest will meet the requirements of (1) even if the timing (but not the amount) of the principal payments (or other similar amounts) is contingent on the extent of prepayments on qualified mortgages and the amount of income from permitted investments.

An interest will still qualify as a regular interest even if the specified principal amount of the regular interest (or the amount of interest accrued on the regular interest) can be reduced as a result of the nonoccurrence of one or more contingent payments with respect to any reverse mortgage loan held by the REMIC if, on the startup day for the REMIC, the sponsor reasonably believes that all principal and interest due under the regular interest will be paid at or prior to the liquidation of the REMIC.