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ARTICLE · 25 APRIL 2020

Securitization Guidance On Coronavirus-Related Forbearances

Hogan Lovells Cadwalader
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On April 13, 2020, the Internal Revenue Service issued a helpful revenue procedure that permits loans that are subject to certain forbearances and related modifications as a result of the COVID-19 pandemic.

United StatesFinance and Banking
Hogan Lovells Cadwalader
Hogan Lovells Cadwalader
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On April 13, 2020, the Internal Revenue Service issued a helpful revenue procedure that permits loans that are subject to certain forbearances and related modifications as a result of the COVID-19 pandemic to be contributed to, and held in, real estate mortgage investment conduits (REMICs) and grantor trusts without jeopardizing these vehicles' U.S. tax status.

More specifically, under the revenue procedure:

  • LTV test. A mortgage loan's LTV does not have to be retested as a result of a qualified forbearance to determine whether the loan is REMIC-eligible;
  • Deemed reissuance. A qualified forbearance of a loan that is held by a REMIC or grantor trust does not jeopardize the tax status of the REMIC or grantor trust;

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