The federal government took a major step in implementing its program for alleviating the subprime mortgage crisis when the Internal Revenue Service, on December 26, 2007, issued Revenue Procedure 2007-72. In its pronouncement, the IRS has said that it will not seek to disqualify a REMIC (that is, a real estate mortgage investment conduit, under Internal Revenue Code Sec. 860A et. seq.) if a mortgage loan that is included in the REMIC is modified, under the conditions stated in this Revenue Procedure. Also, the IRS will not seek to categorize the loan modification as a ?prohibited transaction? under the REMIC rules.

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