On Sept. 16, 2009, the Treasury Department and the Internal Revenue Service concurrently released final regulations1 and a revenue procedure2 governing the U.S. federal income tax treatment of collateralized mortgage-backed securities (CMBS) held by a real estate mortgage investment conduit (REMIC).3 Following issuance of the regulations and the revenue procedure, the Federal Reserve (in conjunction with the FDIC and numerous other federal regulatory agencies) released comprehensive revised guidance for commercial real estate loan modifications.4
These coordinated actions demonstrate a welcome heightened focus at the federal level on the expanding crisis in commercial real estate that until now has been overshadowed at the regulatory level by efforts to deal with a parallel crisis affecting residential real estate. Practitioners providing counsel regarding distressed real estate need to become familiar with these developments, as part of the framework for crafting approaches to address existing, imminent or anticipated distress at commercial real estate assets.
