Clifford Chance

Transition from LIBOR to an Alternative Benchmark Rate Raises Concerns Particular to REMICs

12 February 2020

On October 8, 2019, the U.S. Department of Treasury proposed regulations that would address the tax issues for Real Estate Mortgage Investment Conduits that could arise from the impending transition away from interbank offered rates as reference rates for floating rate debt. As discussed in this briefing, the Proposed Regulations include some important conditions that – if adopted as proposed – will require close oversight to confirm that they are met.

Given the severity of the potential ramifications of not meeting these requirements, it is critical that all participants of a REMIC deal are aware of, and seek legal advice regarding, the tax aspects of switching to a replacement benchmark rate.

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