The Internal Revenue Service (IRS) has issued guidance (Rev. Proc. 2008-28) describing the conditions under which modifications of mortgage loans will not cause IRS to challenge the tax status of the securitization vehicles that hold the loans or to assert that those modifications create a liability for tax on a prohibited transaction.

Two lions of the Senate — Banking Committee Chairman Christopher Dodd (D-CT) and ranking member Richard Shelby (R-AL) — have finally agreed on a compromise version of Dodd’s mortgage-relief legislation.  On May 20, the resulting bill, the Federal Housing Finance Regulatory Reform Act, quickly passed the committee by a 19-2 vote on May 20.  The Senate will likely approve it in short order.  A quick conference with the House could put a bill on President Bush’s desk by the July 4 recess.

Money laundering is a growing problem in the real estate industry, the Financial Crimes Enforcement Network (FinCEN) has warned. The agency released a report that analyzes incidents of suspected money laundering in residential real estate transactions, based on FinCEN’s study of suspicious activity reports (SARs) filed by financial institutions.

We hear daily news reports about the depressed real estate market and foreclosure rate. Of course, we know that loans do not go from being current to being in foreclosure. In April of last year, the federal regulatory agencies issued a joint statement on working with mortgage borrowers in which they encourage lenders to work with residential borrowers who were financially unable to make their mortgage payments. Mortgage delinquency continues to be a problem in 2008. Here are some of the more important consumer compliance issues you should consider when collecting mortgage debt.