The Nevada Housing Division has warned the U.S. Treasury Department that if it does not make changes to its proposed arbitrage regulations, the division may not be able to obtain the best possible interest rates for mortgages for first-time homebuyers.

In a four-page letter sent to Treasury officials on March 7, the housing agency asks department officials to reconsider one of the proposed regulations' two tests for determining whether variable rate bonds hedged with taxable index-based interest rate swaps can be treated as variable yield bonds for purposes of determining if arbitrage was generated.

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