- Modifications of Home Loans under Government Program Will Not Adversely Affect REMICs
- April 22, 2009 | Author: D. Matthew Richardson
- Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Los Angeles Office
The IRS recently issued "safe harbor" guidance that home loans modified under the Home Affordable Modification Program (HAMP) will not adversely affect real estate mortgage investment conduits (REMICs). Without this guidance, payments from the US government to lenders and servicers of home loans under HAMP may have resulted in a 100% penalty tax and may have jeopardized the securitization vehicle's tax-advantaged classification as a REMIC.
According to the Treasury Department, HAMP will help up to 4 million at-risk homeowners avoid foreclosure by allowing modifications to eligible mortgages through a matching program and various incentive payments, thereby reducing homeowners' monthly mortgage payments.