Journal of Taxation of Financial Products

The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was enacted to support individuals and businesses affected by the COVID-19 pandemic and signed into law on March 27, 2020, provides that borrowers experiencing financial hardship due to the national emergency declared by the President on March 13, 2020 may request and obtain forbearance on certain federally backed mortgage loans. The CARES Act applies to both single-family (one to four units) and multifamily (five or more units) federally backed mortgage loans, and requires lenders to acquiesce to any such forbearance requests made within the requisite covered period. Forbearances and related modifications pursuant to the CARES Act could adversely affect the tax status and tax treatment of certain special purpose entities that hold federally backed mortgage loans, including REMICs (real estate mortgage investment conduits), fixed investment (or “grantor”) trusts, and entities seeking to avoid characterization as taxable mortgage pools. These potentially adverse effects could obviate some of the very economic benefits the CARES Act was seeking to encourage.

A version of this article was originally published by Chapman and Cutler LLP on April 16, 2020, and was republished by the Journal of Taxation of Financial Products in July 2020. The republished article is linked below with permission.

Related Practices

We have always been focused on finance.

  • 1913
    TS Chapman partners with Henry Cutler to form Chapman and Cutler
  • 1st
    Chapman's first client in 1913 is still a client of the firm today
  • 22
    Diverse financial practices serving regional, national, and global clients
  • 6
    Offices across the country and in key US financial centers

We use cookies to deliver our online services. Details of the cookies we use and instructions on how to disable them are set out in our Privacy Policy. By using this website you agree to our use of cookies.