IRS Plan to Treat Mortgages as Capital Assets Could Threaten Lenders’ Financial Health
September 7, 2007
Mortgage companies would not be able to immediately deduct losses on mortgage sales if the Internal Revenue Service adopts a proposal to treat mortgage loans and other retained interests, such as “excess servicing fees,” as capital, rather than ordinary assets. The Mortgage Bankers Association warned tax officials at a recent IRS hearing that the proposal could be disastrous for lenders already in financial peril. Facing the prospect of huge losses as financial turmoil spreads beyond…