Expand All | Collapse All+ | | Can Ginnie Mae assist us with meeting this IRS requirement?
| | | Ginnie Mae has received several inquiries regarding APM 07-16, "Collection and Dissemination of Tax Information Reported to Ginnie Mae by Issuers.” This APM addresses Treasury Regulations that have been codified at 26 CFR §1.671-5, as of December 1, 2007. The most current version of Title 26 may also be accessed through http://www.access.gpo.gov/nara/cfr/cfr-table-search.html#page1. Additional details on the quarterly submission process can be found in Appendix VI-18 and in APM 08-11, “Changes to WHFIT Tax Reporting Requirements.” Ginnie Mae is prohibited from advising the public on specific tax matters. Nevertheless, Ginnie Mae has worked with the mortgage industry and the IRS to help develop a reasonable and consistent approach to the challenges and uncertainties presented by these recently finalized regulations. The discussion contained in the following Questions and Answers is not intended or written to be used to provide advice pertaining to specific situations. The following discussion offers only a summary of certain federal income tax regulations to promote a consistent understanding within the mortgage industry. Faith Colson of the IRS is listed as the contact for questions regarding the Reporting Rules for Widely Held Fixed Investment Trusts. She may be reached at 202-622-3060.
Ginnie Mae Issuers should consult their own tax advisors regarding the specific tax treatment and tax accounting of any mortgage-backed security. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | How do you determine if there is Original Issue Discount (OID)? | | | The OID in question is the OID associated with the original mortgage issuance rather than the initial sale price of the mortgage-backed securities because the mortgage-backed securities are not taxable entities and the security holders are recognized as the owners of the securities' underlying assets.
This is supported by Treasury Regulations §§ 301.7701-2 through 301.7701-4, and Revenue Rulings 70-544, 70-545, 74-169, and 84-10. The Treasury rules indicate that the mortgages underlying the mortgage-backed securities issued before August 13, 1998, can be treated as having been issued with no OID (26 CFR §1.671-5(c)(2)(ii)(A)).
For mortgage-backed securities issued from August 13, 1998, through January 24, 2006, if the Issuer has attempted in good faith, but without success, to obtain the required data to provide OID information, the Issuer may assume that the underlying mortgages were issued without OID. The regulations require that OID be reported for all mortgage-backed securities issued after January 24, 2006.
In general, there is no reportable OID on a 30-year mortgage issued with fewer than 5 points, and no reportable OID on a 15-year mortgage issued with fewer than 2½ points. These guidelines are supported by Treasury Regulations at § 1.1273-1(d)(2). | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | How do you calculate the Market Discount Fraction (MDF)?
| | | The IRS regulations specifically describe two Market Discount Fraction calculations, one used when there is OID, and one when there is no OID. The following information is from the regulations codified at 26 CFR §1.671-5 (g)(1)(v).
For either type of security, with or without OID, the MDF must be expressed as a decimal carried to at least eight places.
For mortgage-backed securities backed by mortgages issued with OID, the MDF equals the OID accrued during the month, divided by the total remaining OID as of the beginning of the month. For securities backed by mortgages issued without OID, the MDF equals the amount of stated interest paid to the mortgage-backed security during the month, divided by the total amount of stated interest remaining to be paid to the mortgage-backed security as of the beginning of the month.
The Treasury regulations require that, in order to compute the total amount of stated interest remaining to be paid and the total remaining OID as of the beginning of the month, the trustee must use the prepayment assumption used in pricing the original issue of trust interests. For mortgage-backed securities issued before January 24, 2006, if the Issuer, after a good faith effort to ascertain that information, does not know the prepayment assumption used in pricing the original issue of trust interests, the Issuer may use any reasonable prepayment assumption to calculate these amounts provided it continues to use the same prepayment assumption consistently thereafter. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | With respect to Ginnie Mae book-entry securities, will Issuers continue to be responsible for reporting tax information on these securities electronically to the IRS? | | | No. Issuers are not required to file 1099s with the IRS for book-entry securities. Instead, the middleman that distributes payments of principal and interest on the securities to the beneficial owners is required to file a 1099 with the IRS for each beneficial owner of a book-entry security. For Ginnie Mae securities the appropriate middleman is usually a broker-dealer.
Issuers are required to file 1099s with the IRS only with respect to certificated securities. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | The Reporting and Feedback System (RFS) Technical Reference Guide file dated June 6, 2007, states that all Ginnie Mae II pools issued after 1998 will require reporting. APM 07-16 does not delineate between Ginnie Mae I and/or Ginnie Mae II pools. Which is correct? | | | Issuers are to report on all Ginnie Mae pools, including Ginnie Mae I and II. The RFS Technical Reference Guide will be updated to reflect the following:
- For pools issued before August 13, 1998, no OID reporting is needed.
- For pools issued from August 13, 1998, through January 24, 2006, OID reporting is required, but there are no penalties if the Issuer has attempted in good faith to obtain historical OID data, but without success.
- For pools issued after January 24, 2006, OID must be reported.
These exceptions do not apply to the Market Discount Fraction. The MDF must be reported for all pools in existence as of January 1, 2007. For purposes of calculating the MDF for pools issued before August 13, 1998, the trustee may assume the mortgages were issued without OID. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | Where and when do I submit my pool Tax Identification Numbers (TIN)? | | | The request for pool Tax Identification Numbers for all active pools is a one-time request that may be submitted via CSV file or flat file. The submission of pool TINs is due not later than January 10, 2008. The submission method is via Ginnie Mae's e-Access.
Reminder: All pools submitted for a January 1, 2008 issuance and thereafter, must include a pool TIN at issuance. Effective January 2008, pools transmitted via GinnieNET must have a pool TIN or it will be rejected. Pool TINs for loan packages that are part of a multiple Issuer pool are assigned by the Pool Processing Agent. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | Can I submit OID and MDF in a text file or CSV file?
| | | No. Issuers must use the flat file layout that is outlined in the attachment in APM 07-16. The CSV file option is only available for the one-time submission of pool TINs. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | If I submit a pool via GinnieNET in January 2008, can I fax the TIN for that pool in February 2008? | | | No. All pools submitted for a January 1, 2008 issuance and thereafter, must include a pool TIN at issuance. Effective January 2008, pools transmitted via GinnieNET must have a pool TIN or it will be rejected. Submitting pool TINs at a later date will not be acceptable in 2008. Pool TINs for loan packages that are part of a multiple issuer pool are assigned by the Pool Processing Agent. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | Can the CSV reporting file layout be used for both the initial reporting and also for each monthly report submitted until RFS is implemented? | | | No. The CSV file is only for the pool TIN one-time submission. OID and MDF must be submitted using the flat file. Issuers should begin reporting OID and MDF as part of their monthly reporting process, beginning with the February 2008 reporting month. Issuers that need more time must report OID and MDF no later than July 2008.
If an Issuer cannot submit until July, the July 2008 reporting month submission must include OID and MDF for the months of January-June of 2008. Effective with the August 2008 reporting month and thereafter, Issuers are to report OID and MDF on a monthly basis.
Once the Reporting and Feedback System (RFS) is implemented supplemental file layout submission in APM 07-16 will not be required. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | + | | If I am submitting 2007 tax data and have included TINs, do I have to submit pool TINs in a separate submission?
| | | No. If the issuer submits 2007 tax data, a separate TIN file is no longer needed. The 2007 tax data file will contain the required TIN information. | | | Reference:
APM 07-16 | | | Last Updated: 12/5/2008 | | | |
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