Definition: An intangible asset held for investment as part of a “qualified reserve fund” which is defined in the Code as any reasonably required reserve to provide for full payment of expenses of the REMIC or amounts due on regular interests in the event of defaults on qualified mortgages or lo’r than expected returns on cash flow investments. The creditworthiness of the qualified mortgages and the extent and nature of any guarantee are factors to be considered in determining the reasonableness of the amount of reserve. The reserve must be reduced timely as payments on the qualified mortgages are received.
