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ARTICLE · 13 JANUARY 2016

IRS Issues Private Letter Ruling Regarding REMIC Trustees Entering Into Settlement Agreements

Dentons
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On December 31, 2015, the IRS released PLR 201601005 (dated April 8, 2015), which addressed the previous uncertainty on the ability of Trustees in real estate mortgage investment conduit...

United StatesFinance and Banking
Andrea Mandell
Andrea Mandell
Mason Crocker
Mason Crocker
Ryan Zucchetto
Ryan Zucchetto
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On December 31, 2015, the IRS released PLR 201601005 (dated April 8, 2015), which addressed the previous uncertainty on the ability of Trustees in real estate mortgage investment conduit (REMIC) transactions to enter into settlement agreements with a mortgage originator or master servicer on a large-scale basis, as opposed to a deal-by-deal basis, for certain breaches of representations and warranties made by such parties relating to the mortgage loans securitized in such REMICS and the receipt of an allocable share of such settlement funds by the different REMICs (the "Taxpayers"). While this PLR addressed several specific technical issues, the IRS generally found that the Taxpayers would not lose their status as REMICs due to the Trustee's execution of such settlement agreements and the receipt of a portion of these settlement funds to different REMICs.

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