The Internal Revenue Service issued a revenue procedure that describes the conditions under which changes to certain subprime mortgage loans will not cause the Internal Revenue Service to challenge the tax status of certain securitization vehicles holding the loans.
"The purpose of this revenue procedure is to provide certainty in the current economic environment with respect to certain potential tax issues that may be implicated by fast-track loan modifications," said the IRS.
Rev. Proc. 2007-72 applies to a fast-track modification of a loan pursuant to the American Securitization Forum Framework, and a second-lien holder's action of subordinating its lien to any new lien that may arise under a loan as the result of a fast-track modification before July 31, 2010.
