In the fall of 2009 REMIC rules were modified with the inten

In the fall of 2009, REMIC rules were modified with the intent of easing the resolution of securitized loans that were likely to become delinquent in the future. Observing most of the loans recently assigned to Special Servicers, we are seeing this modification being implemented. What is the modification?

Solution

The modification is known as the Revenue Procedure. It was introduced by IRS in 2009. It states that if there is a loan that has the risk of defaulting then the REMIC or the special servicer can make material modifications in the mortgage loan. This will be done with the intention of increasing the chances of recovering the loan and it will also not affect the tax status of REMIC.