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IRS Documents on Modifying REMICs

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Earlier today, word came out that the IRS will permit the modification of commercial real estate loans included in real estate mortgage investment conduits.

The guidance would ease requirements for collateral and other guarantees in many cases. Borrowers in investor pools known as Real Estate Mortgage Investment Conduits would be allowed to refinance some loans without paying tax penalties. The rules were urged by trade associations such as the Real Estate Roundtable and opposed by the Commercial Mortgage Securities Association.

“Changes to the regulations are necessary to better accommodate evolving practices in the commercial-mortgage industry,” the regulations say. “These changes will affect lenders, borrowers, servicers and sponsors of securitizations of mortgages” in Real Estate Mortgage Investment Conduits. Those are tax-advantaged organizations used for pooling investments in mortgage-backed securities.

Sam Chandan, chief economist with Real Estate Econometrics, sent out links to the two pertinent documents on the IRS web site.

I've embedded the two documents below.

IRS Remic modified rules

Irs 2

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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