Page:United States Statutes at Large Volume 102 Part 4.djvu/450

 102 STAT. 3420

PUBLIC LAW 100-647—NOV. 10, 1988 (4) Subparagraph (A) of section 860F(b)(l) of the 1986 Code is amended by striking out "the transfer of any property to a REMIC" and inserting in lieu thereof "the transfer of any property to a REMIC in exchange for regular or residual interests in such REMIC". (5)(A) Paragraph (1) of section 860G(a) of the 1986 Code is amended to read as follows: "(1) REGULAR INTEREST.—The term 'regular interest' means any interest in a REMIC which is issued on the startup day with fixed terms and which is designated as a regular interest if— "(A) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount), and "(B) interest payments (or other similar amount), if any, with respect to such interest at or before maturity— "(i) are payable based on a fixed rate (or to the extent provided in regulations, at a variable rate), or "(ii) consist of a specified portion of the interest payments on qualified mortgages and such portion does not vary during the period such interest is outstanding. The interest shall not fail to meet the requirements of subparagraph (A) merely because the timing (but not the amount) of the principal payments (or other similar amounts) may be contingent on the extent of prepayments on qualified mortgages and the amount of income from permitted investments." (B) Paragraph (2) of section 860G(a) of the 1986 Code is amended to read as follows: "(2) RESIDUAL INTEREST.—The term 'residual interest' means an interest in a REMIC which is issued on the startup day, which is not a regular interest, and which is designated as a residual interest" (C) Paragraph (3) of section 860G(a) of the 1986 Code is amended— (i) by striking out "on or before the startup day" in subparagraph (A)(i) and inserting in lieu thereof "on the startup day in exchange for regular or residual interests in the REMIC", (ii) by inserting "if, except as provided in regulations, such purchase is pursuant to a fixed-price contract in effect on the startup day" before the comma at the end of subparagraph (A)(ii), and (iii) by striking out "on or before the startup day" in subparagraph (C) and inserting in lieu thereof "on the startup day in exchange for regular or residual interests in the REMIC". (D) Subparagraph (A) of section 860G(a)(4) of the 1986 Code is amended to read as follows: "(A) which would be a qualified mortgage if transferred on the startup day in exchange for regular or residual interests in the REMIC, and". (E) Paragraph (9) of section 860G(a) of the 1986 Code is amended to read as follows: "(9) STARTUP DAY.—The term 'startup day' means the day on which the REMIC issues all of its regular and residual interests. To the extent provided in regulations, all interests issued (and all transfers to the REMIC) during any period (not exceeding 10 days) permitted in such regulations shall be treated as occur-

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