NAREIT Recommends Modifications to MODA Regarding Mark-to-Market Treatment of Derivatives and Other Hedges

NAREIT and a number of other real estate associations have sent two letters to Senate Finance Committee Ranking Member Ron Wyden (D-OR) that provide comments on the Modernization of Derivatives Tax Act of 2016 (MODA) discussion draft.

MODA generally would require mark-to-market (MTM) and ordinary treatment for all derivatives. 

The first letter to Wyden requests “to be announced” (TBA) forward contracts to acquire mortgage-backed securities guaranteed by government agencies including Fannie Mae, Freddie Mac and Ginnie Mae be excluded from the definition of “derivatives” requiring MTM treatment.

Among other things, the second letter recommends changes in MODA to minimize the timing and character mismatch between, for example, losses on the sale/disposition of hedge assets and ordinary gains on the MTM treatment that MODA would require on hedges of such assets. 


(Contact: Dara Bernstein at


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