Bill Aims to Update REMIC Structure

Legislation aimed at making the structure of real estate mortgage investment conduits more responsive to today's environment has been reintroduced by Reps. Mark Foley and Earl Pomeroy, according to the Mortgage Bankers Association.The REMIC structure governs commercial mortgage-backed securities transactions, and The REMIC Modernization Act seeks to make it more flexible. The MBA said the changes would enable commercial real estate property owners to upgrade the property and undertake some property management activities even after a mortgage has been securitized, and is subject to the REMIC structure, without the need to get "costly and burdensome" tax opinions. "The REMIC tax law is nearly 20 years old and has not kept pace with current transactional requirements and market structures," said Daniel Phelan, chairman of the MBA's commercial real estate/multifamily finance board of governors. "The legislation will make changes that will both protect the investments of CMBS bondholders and allow borrowers to make improvements to their property. It is good government at its best." The modernization of REMIC provisions in the tax code that the legislation seeks will not have much impact on federal tax revenue, the trade association said. The MBA can be found online at http://www.mortgagebankers.org.