The Internal Revenue Service has proposed revisions to the real estate mortgage investment conduit (REMIC) regulations that would expand the list of permitted loan modifications to include certain modifications of commercial mortgages. The regulations were published in the November 9 Federal Register, and comments are due February 7. Generally, if a loan acquired by a REMIC is significantly modified, the modified mortgage is treated as a new obligation issued in exchange for the original loan. If the modified obligation is not a qualified replacement mortgage, the deemed disposition of the original mortgage will be treated as a prohibited transaction.
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