Ignore everything else we think might happen in fraudclosuregate….the three letters that send a cold shiver up any thinking person’s spine are….
INTERNAL REVENUE SERVICE
The issue is simple. The mortgage backed trusts flagrantly violated the IRS’s REMIC regulations. The banksters got favored treatment under the REMIC pass-through rules. These rules required the banksters to transfer the mortgages into the trusts within 120 days of closing. They ignored this, and many other important REMIC rules. And if they ignore the rules, they blow their REMIC tax-favored status and owe the IRS BAAAAAAHHHHJILLIONS of dollars……
We’ve all know for a long time that if the IRS ever dug into this issue ….. all bets are off …..
The IRS confirmed to Reuters that the review comes in response to mounting evidence that banks violated tax requirements by mishandling the transfer of mortgages to REMICs, short for Real Estate Mortgage Conduits.
Should the IRS find reason to take tough action, the financial impact could be enormous. REMIC investments are held by pension funds, in individual retirement plans such as 401(k)s and by state and local government entities.
As of the end of 2010, investments in REMICs totaled more than $3 trillion, according to data supplied by the Securities Industry and Financial Markets Association.
In a brief statement in response to questions from Reuters, the agency said: “The IRS is aware of questions in the market regarding REMICs and proper ownership of the underlying mortgages as set out in federal tax law, and is actively reviewing certain aspects of this issue.”