On February 4, 2000, the Internal Revenue Service released proposed regulations concerning Financial Asset Securitization Investment Trusts ( Fasits). Fasits were authorized by statute in 1996 to provide a nontaxable securitization vehicle for all types of debt instruments, including mortgage loans. It was hailed as a potentially more flexible vehicle than Remics. The new rules, however, seem to emphasize areas where the IRS perceives there to be potential for abuse, rather than establishing flexible guidelines that would make the Fasit vehicle more useful to the securitization industry. Commentators can help Treasury fill in technical gaps and seek to better define anti-abuse situations. This article considers some highlights of the new rules that may be worthy of comment.
Formal Requirements and Anti-Abuse Rules