Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has issued two pieces of guidance addressing real estate mortgage investment conduits (REMICs) and the Home Affordable Modification Program (HAMP).

Notice 2009-36

  If a payment made to a REMIC under the HAMP is described in Code Sec. 860G(d)(1), and if the payment is not covered by any of the exceptions in Code Sec. 860G(d)(2), then upcoming regulations will provide an exception for that payment. Until such regulations are issued, taxpayers may rely on this guidance.

  Pursuant to the HAMP, the U.S. government may make certain payments to a REMIC, one of the types of securitization vehicles that hold pooled mortgages. The new guidance states that any payment made to a REMIC under the HAMP will not be a "contribution" subject to the 100-percent tax set forth in Code Sec. 860G(d)(1). The regulations are expected to be effective for payments made on or after March 4, 2009.

Rev. Proc. 2009-23

  The conditions under which the IRS will not challenge the tax status of securitization vehicles that hold mortgage loans modified under the HAMP are set forth. The IRS will not:

  (1) challenge a securitization vehicle's qualification as a REMIC on the grounds that the modifications are not among the exceptions listed in Reg. §1.860G-2(b)(3), or that they result in a deemed reissuance of the REMIC regular interests;

  (2) contend that the modifications are prohibited transactions under Code Sec. 860F(a)(2) on the grounds that the modifications result in one or more dispositions of qualified mortgages that are not among the exceptions listed in Code Sec. 860F(a)(2)(A)(i) --(iv); or

  (3) challenge a securitization vehicle's trust classification under Reg. §301.7701-4(c) on the grounds that the modifications manifest a power to vary the investment of the certificate holders.

  CCH Comment. In response to the deep contraction in the economy and the housing market, on February 18, 2009, the federal government announced the Homeowner Affordability and Stability Plan, which is intended to help homeowners at risk of default to modify their mortgages to avoid foreclosure. The HAMP includes detailed protocols for identifying at-risk borrowers, and applies both to loans that investors hold directly and those held through securitization vehicles, such as investment trusts and REMICs.

  This guidance is effective for loan modifications on or after March 4, 2009.

Notice 2009-36, 2009FED ¶46,332

Rev. Proc. 2009-23, 2009FED ¶46,333

Other References:

 
Code Sec. 860F

  CCH Reference - 2009FED ¶26,702.068

 
Code Sec. 860G

  CCH Reference - 2009FED ¶26,721.032

  CCH Reference - 2009FED ¶26,721.70

 
Code Sec. 7701

  CCH Reference - 2009FED ¶43,091.04

  CCH Reference - 2009FED ¶43,091.68

  CCH Reference - 2009FED ¶43,091.70

  Tax Research Consultant

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