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Rev. Proc. 2008-28 and Foreclosure Relief for Securitizations

By Doug Cornelius

The Internal Revenue Service issued Revenue Procedure 2008-28 [.PDF ] which provides for the modification of certain mortgage loans will not jeopardize the favorable tax treatment of the capital structure for certain securitization capital structures. One issue impacting the downturn in the real estate market is the inability of some lenders to revise the loan terms to avoid foreclosure. The packing of loans into a securitization structure was usually accomplished by using a REMIC or other tax-favorable structure. By adhering to the REMIC rules, the payments to the lender passed through the REMIC structure would not be taxed until received by the investors in the REMIC structure. REMICs are governed by Section 860A - 860G of the Internal Revenue Code...continue to full post

Full post as published by Real Estate Space on May 24, 2008 (boomark / email).