Rev. Rul. 74-169

Rev. Rul. 70-544, 1970-2 C.B. 6, and Rev. Rul. 70-545, 1970-2 C.B. 7, concerned the tax consequences of transactions involving certain certificates guaranteed by the Government National Mortgage Association ("GNMA") that represent a proportionate interest in mortgages on real property maintained in a "pool" by a savings and loan association.

The above Revenue Rulings held, in part, that a certificate owned by a savings and loan association is considered as representing "loans secured by an interest in real property" within the meaning of section 7701(a)(19)(C)(v) of the Internal Revenue Code of 1954, provided the real property is (or, from the proceeds of the loan, will become) the type of real property described in that section of the Code.

Held, a certificate issued in accordance with the terms of Rev. Rul. 70-544 and Rev. Rul. 70-545 which is held by a domestic building and loan association (or other eligible mortgage institutions) within the meaning of section 7701(a)(19) of the Code is considered as representing "qualifying real property loans" within the meaning of section 593(e) provided the real property underlying the mortgages is (or, from the proceeds of the loan, will become) the type of real property described in that section.

Rev. Rul. 70-544 and Rev. Rul. 70-545 are hereby modified.