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New Regs Ease Up Some on Commercial Lending Practices
Final regulations (T.D. 9463) issued by the Department of the Treasury will make it easier for lenders to restructure commercial real estate loans without triggering tax penalties.
The final regulations cover certain technical requirements, including collateral guarantees. As a result, investors in Real Estate Mortgage Investment Conduits (REMICs) will not be subject to tax penalties when attempting to restructure or refinance certain real estate loans.
Under the old rules, the tax benefits offered by REMICs were penalized if the loans were significantly altered.
These new regulations will improve the conditions for securitization of mortgages in REMICs or at least remove certain tax obstacles as lenders and market participants seek to work out loans before they become troubled. The final regulations went into effect on Sept.16.
The regulations do not apply to Real Estate Investment Trusts (REITs), although the Internal Revenue Service may expand the new rules to such investment vehicles in the future according to IRS Notice 2009-17.
For more information, e-mail Rob Dietz at NAHB, or call him at 800-638-5242 x8285.
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