Text: H.R.1903 — 111th Congress (2009-2010)All Information (Except Text)

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Introduced in House (04/02/2009)


111th CONGRESS
1st Session
H. R. 1903


To provide incentives for the residential housing market.


IN THE HOUSE OF REPRESENTATIVES

April 2, 2009

Mr. Cantor (for himself, Mr. Lee of New York, Mr. Dreier, Mrs. Biggert, Mr. Brady of Texas, Mr. McCarthy of California, Mr. Cassidy, Mr. Campbell, Mrs. Bono Mack, Mr. Paulsen, and Mr. Boustany) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Financial Services and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To provide incentives for the residential housing market.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title; table of contents.

(a) Short title.—This Act may be cited as the “Responsible Homeowners Act of 2009”.

(b) Table of contents.—The table of contents of this Act is as follows:


Sec. 1. Short title; table of contents.

Sec. 2. Stopping mortgage fraud.

Sec. 3. Tax credit for mortgage refinancing.

Sec. 4. Tax incentives for voluntary mortgage modifications.

Sec. 5. Servicer safe harbor for mortgage loan modifications.

Sec. 6. Credit for certain home purchases.

Sec. 7. Certain gains on single-family residential rental property excluded from gross income.

SEC. 2. Stopping mortgage fraud.

(a) Priority of efforts.—The Secretary of Housing and Urban Development, the Assistant Secretary for Housing—Federal Housing Commissioner of the Department of Housing and Urban Development, and the Director of the Federal Housing Finance Agency, shall give increased priority to efforts and activities to detect, identify, reduce, and report fraud in residential mortgage lending, including in the marketing, offering, origination, underwriting, servicing, and refinancing of residential mortgages, and in all other aspects of residential mortgage lending. Such efforts and activities shall include increasing the number of personnel assigned specifically to mortgage fraud detection.

(b) Authorization of appropriations.—For fiscal years 2009, 2010, 2011, 2012, and 2013, there are authorized to be appropriated to the Attorney General a total of—

(1) $31,250,000 to support the employment of 30 additional agents of the Federal Bureau of Investigation and 2 additional dedicated prosecutors at the Department of Justice to coordinate prosecution of mortgage fraud efforts with the offices of the United States Attorneys; and

(2) $750,000 to support the operations of interagency task forces of the Federal Bureau of Investigation in the areas with the 15 highest concentrations of mortgage fraud.

SEC. 3. Tax credit for mortgage refinancing.

(a) Allowance of credit.—Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section:

“SEC. 25E. Credit for mortgage refinancing.

“(a) Allowance of credit.—In the case of an individual who completes a refinancing of a qualified residential mortgage during the taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to $5,000.

“(b) Definitions.—For purposes of this section—

“(1) QUALIFIED RESIDENTIAL MORTGAGE.—The term ‘qualified residential mortgage’ means indebtedness which is secured by the taxpayer’s principal residence (within the meaning of section 121). Such term shall not include any indebtedness which is secured by a residence which is located outside the United States.

“(2) REFINANCING.—The term ‘refinancing’ means a qualified residential mortgage any portion of the proceeds of which are used to satisfy the taxpayer’s entire obligation under another qualified residential mortgage.

“(c) Coordination with home buyer credits.—No credit shall be allowed under this section for any taxable year if the taxpayer is allowed a credit under section 25F, 36, or 1400C for such taxable year or any prior taxable year. No credit shall be allowed under sections 25F, 36, or 1400C for any taxable year if the taxpayer is allowed a credit under this subsection (a) for any prior taxable year.

“(d) Exception for nonresident alien individuals.—No credit shall be allowed under subsection (a) to any taxpayer if such taxpayer is a nonresident alien individual.

“(e) Election.—A taxpayer may elect to have subsection (a) not apply for any taxable year.

“(f) Termination.—This section shall not apply to any refinancing completed after June 30, 2010.”.

(b) Clerical amendment.—The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25D the following new item:


“Sec. 25E. Credit for mortgage refinancing.”.

(c) Effective date.—The amendments made by this section shall apply to refinancings completed after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 4. Tax incentives for voluntary mortgage modifications.

(a) Exclusion of qualified appreciation payments.—

(1) IN GENERAL.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139C the following new section:

“SEC. 139D. Mortgage modification income.

“(a) In general.—In the case of a lender who enters into a qualified mortgage workout with a borrower, gross income shall not include any qualified appreciation payment made pursuant to such workout.

“(b) Qualified mortgage workout.—For purposes of this section, the term ‘qualified mortgage workout’ means legally binding modifications to a qualified mortgage which provide for each of the following:

“(1) Monthly payments under the mortgage which do not exceed 38 percent of the gross monthly income of the borrower.

“(2) Such modifications shall achieve the requirement of paragraph (1) by means of one or more of the following:

“(A) A reduction in the interest rate of the loan.

“(B) An extension of the term of the loan (but not greater than 40 years).

“(C) A reduction in the principal amount of the loan.

“(3) Provides the lender with a right to a payment of a share of any appreciation in the value of the residence which secures the loan upon the disposition of the residence by the borrower.

“(c) Other definitions and special rule.—For purposes of this section—

“(1) QUALIFIED MORTGAGE.—The term ‘qualified mortgage’ means indebtedness—

“(A) which is secured by a principal residence (within the meaning of section 121) which is located in the United States, and

“(B) which fails to meet the requirement of subsection (b)(1).

“(2) QUALIFIED APPRECIATION PAYMENT.—The term ‘qualified appreciation payment’ means the payment described in subsection (b)(4).

“(3) TREATMENT OF REFINANCINGS.—A refinancing of a qualified mortgage shall be treated in the same manner as a modification to such mortgage.

“(d) Termination.—Subsection (a) shall not apply to any qualified mortgage workout which becomes legally binding after June 30, 2010.”.

(2) CONFORMING AMENDMENT.—The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139C the following new item:


“Sec. 139D. Mortgage modification income.”.

(b) Exclusion of debt cancelled pursuant to a qualified mortgage workout.—

(1) IN GENERAL.—Paragraph (1) of section 108(a) of such Code is amended by striking “or” at the end of the subparagraph (D), by striking the period at the end of subparagraph (E) and inserting “, or”, and by adding at the end the following new subparagraph:

“(F) the indebtedness is a qualified mortgage (as defined in section 139D(c)(1)) and is discharged in connection with a qualified mortgage workout to which section 139D(a) applies.”.

(2) BASIS REDUCTION.—Subsection (h) of section 108 of such Code is amended—

(A) by striking “subsection (a)(1)(E)” in paragraph (1) and inserting “subparagraph (E) or (F) of subsection (a)(1)”, and

(B) by striking “qualified” in the heading of such subsection.

(3) COORDINATION OF EXCLUSIONS.—Paragraph (2) of section 108(a) of such Code is amended—

(A) by striking “and (E)” in subparagraph (A) and inserting “(E), and (F)”, and

(B) by adding at the end the following new subparagraph:

“(D) MORTGAGE WORKOUT EXCLUSION TAKES PRECEDENCE UNLESS ELECTED OTHERWISE.—Subparagraphs (B) and (E) shall not apply to a discharge to which paragraph (1)(F) applies unless the taxpayer elects to have paragraph (1)(F) not apply.”.

(c) Effective date.—The amendments made by this section shall apply to qualified mortgage workouts (within the meaning of section 139D of the Internal Revenue Code of 1986, as added by this section) which become legally binding after the date of the enactment of this Act.

SEC. 5. Servicer safe harbor for mortgage loan modifications.

(a) Safe harbor.—

(1) LOAN MODIFICATIONS AND WORKOUT PLANS.—Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer that acts consistent with the duty set forth in section 129A(a) of Truth in Lending Act (15 U.S.C. 1639a) shall not be liable for entering into a loan modification, workout, or other loss mitigation plan, including, but not limited to, disposition, including any modification or refinancing undertaken pursuant to standard loan modification, sale, or disposition guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008, with respect to any such mortgage that meets all of the criteria set forth in paragraph (2)(B) to—

(A) any person, based on that person’s ownership of a residential mortgage loan or any interest in a pool of residential mortgage loans or in securities that distribute payments out of the principal, interest and other payments in loans on the pool;

(B) any person who is obligated pursuant to a derivatives instrument to make payments determined in reference to any loan or any interest referred to in subparagraph (A); or

(C) any person that insures any loan or any interest referred to in subparagraph (A) under any law or regulation of the United States or any law or regulation of any State or political subdivision of any State.

(2) ABILITY TO MODIFY MORTGAGES.—

(A) ABILITY.—Notwithstanding any other provision of law, and notwithstanding any investment contract between a servicer and a securitization vehicle or investor, a servicer—

(i) shall not be limited in the ability to modify mortgages, the number of mortgages that can be modified, the frequency of loan modifications, or the range of permissible modifications; and

(ii) shall not be obligated to repurchase loans from or otherwise make payments to the securitization vehicle on account of a modification, workout, or other loss mitigation plan for a residential mortgage or a class of residential mortgages that constitute a part or all of the mortgages in the securitization vehicle,

if any mortgage so modified meets all of the criteria set forth in subparagraph (B).

(B) CRITERIA.—The criteria under this subparagraph with respect to a mortgage are as follows:

(i) Default on the payment of such mortgage has occurred or is reasonably foreseeable.

(ii) The property securing such mortgage is occupied by the mortgagor of such mortgage.

(iii) The servicer reasonably and in good faith believes that the anticipated recovery on the principal outstanding obligation of the mortgage under the particular modification or workout plan or other loss mitigation action will exceed, on a net present value basis, the anticipated recovery on the principal outstanding obligation of the mortgage to be realized through foreclosure.

(3) APPLICABILITY.—This subsection shall apply only with respect to modifications, workouts, and other loss mitigation plans initiated before January 1, 2012.

(b) Reporting.—Each servicer that engages in loan modifications or workout plans subject to the safe harbor in subsection (a) shall report to the Secretary on a regular basis regarding the extent, scope and results of the servicer’s modification activities. The Secretary shall prescribe regulations specifying the form, content, and timing of such reports.

(c) Legal costs.—If an unsuccessful action is brought against a servicer by any person described in subparagraph (A), (B), or (C) of subsection (a)(1), such person shall bear any actual legal costs of the servicer, including reasonable attorney fees and expert witness fees, incurred in good faith in such action, as determined by the court.

(d) Definitions.—For purposes of this section, the following definitions shall apply:

(1) SECRETARY.—The term “Secretary” means the Secretary of the Treasury.

(2) SECURITIZATION VEHICLE.—The term “securitization vehicle” means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that—

(A) is the issuer, or is created by the issuer, of mortgage pass-through certificates, participation certificates, mortgage-backed securities, or other similar securities backed by a pool of assets that includes residential mortgage loans; and

(B) holds such mortgages.

SEC. 6. Credit for certain home purchases.

(a) Allowance of credit.—Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986, as amended by this Act, is amended by inserting after section 25E the following new section:

“SEC. 25F. Credit for certain home purchases.

“(a) Allowance of credit.—In the case of an individual who makes an eligible purchase during the taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to so much of the purchase price of the residence as does not exceed $15,000.

“(b) Downpayment requirement.—No credit shall be allowed under subsection (a) to any taxpayer with respect to the purchase of any residence unless such taxpayer makes a downpayment of not less 5 percent of the purchase price of such residence.

“(c) Definitions.—For purposes of this section—

“(1) ELIGIBLE PURCHASE.—The term ‘eligible purchase’ means the purchase of a residence for the taxpayer if—

“(A) such residence is located in the United States,

“(B) the construction of such residence began before 2009, and

“(C) such purchase is made by the taxpayer before July 1, 2010.

“(2) OTHER DEFINITIONS.—The terms ‘purchase’ and ‘purchase price’ have the respective meanings given such terms by section 26(c).

“(d) Exceptions.—No credit shall be allowed under subsection (a) to any taxpayer for any taxable year with respect to the purchase of a residence if—

“(1) credit under section 36 (relating to first-time homebuyer credit) or 1400C (relating to first-time homebuyer in the District of Columbia) is allowed to the taxpayer (or the taxpayer's spouse) for such taxable year or any prior taxable year,

“(2) the residence is financed by the proceeds of a qualified mortgage issue the interest on which is exempt from tax under section 103,

“(3) the taxpayer is a nonresident alien individual, or

“(4) the taxpayer disposes of such residence (or such residence ceases to be a residence of the taxpayer (or, if married, the taxpayer’s spouse)) before the close of such taxable year.

“(e) Limitation based on amount of tax.—In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of—

“(1) the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over

“(2) the sum of the credits allowable under this subpart (other than this section and section 25D) for the taxable year.

“(f) Carryforwards of unused credit.—

“(1) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX.—In the case of a taxable year to which section 26(a)(2) applies, if the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a)(2) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section and sections 25D and 1400C), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

“(2) RULE FOR OTHER YEARS.—In the case of a taxable year to which section 26(a)(2) does not apply, if the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by subsection (e) for such taxable year, such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

“(3) LIMITATION.—No credit may be carried forward under this subsection to any taxable year following the third taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis.

“(g) Other rules To apply.—

“(1) RELATED PERSONS.—Rules similar to the rules of section 26(c)(5) shall apply for purposes of this section.

“(2) MARRIED INDIVIDUALS FILING SEPARATE RETURNS, ETC.—Rules similar to the rules of subparagraphs (B) and (C) of section 26(b)(1) shall apply for purposes of this section.

“(3) REPORTING.—Rules similar to the rules of section 26(e) shall apply for purposes of this section.

“(h) Recapture of credit.—Rules similar to the rules of section 26(f) shall apply for purposes of this section, except that—

“(1) paragraph (1) thereof shall be applied by substituting ‘3313 percent’ for ‘623 percent’, and

“(2) paragraph (7) thereof shall be applied by substituting ‘3 years’ for ‘15 years’.”.

(b) Conforming amendments.—

(1)(A) Section 23(b)(4)(B) of such Code is amended by striking “section 25D” inserting “sections 25D and 25F”.

(B) Section 24(b)(3)(B) of such Code is amended by inserting “25F,” after “25D,”.

(C) Section 25(e)(1)(C)(ii) of such Code is amended by inserting “25F,” after “25D,”.

(D) Section 25B(g)(2) of such Code is amended by inserting “25F,” after “25D,”.

(E) Section 26(a)(1) of such Code is amended by inserting “25F,” after “25D,”.

(F) Section 30(c)(2)(B)(ii) of such Code is amended by inserting “25F,” after “25D,”.

(G) Section 30B(g)(2)(B)(ii) of such Code is amended by inserting “25F,” after “25D,”.

(H) Section 30D(c)(2)(B)(ii) of such Code is amended by striking “and 25D” and inserting “, 25D, and 25F”.

(I) Section 904(i) of such Code is amended by inserting “25F,” after “25B,”.

(2) Paragraph (1) of section 23(c) of such Code is amended by inserting “, 25F,” after “25D,”.

(3) The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code, as amended by this Act, is amended by inserting after the item relating to section 25E the following new item:


“Sec. 25F. Credit for certain home purchases.”.

(c) Effective date.—The amendments made by this section shall apply to residences purchased after the date of the enactment of this Act, in taxable years ending after such date.

SEC. 7. Certain gains on single-family residential rental property excluded from gross income.

(a) In general.—Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986, as amended by this Act, is amended by inserting after section 139D the following new section:

“SEC. 139E. Certain gains on single-family residential rental property.

“(a) In general.—Gross income shall not include any gain from the sale or exchange of a qualified single-family residential rental property.

“(b) Limitation.—The amount of gain excluded from gross income under subsection (a) with respect to any sale or exchange shall not exceed $250,000.

“(c) Qualified single-family residential rental property.—For purposes of this section—

“(1) IN GENERAL.—The term ‘qualified property’ means any real property located in the United States which—

“(A) was acquired by the taxpayer by purchase (as defined in section 179(d)(2)) during the period beginning on the date of the enactment of this section and ending on June 30, 2010,

“(B) was held by the taxpayer for 2 years or more, and

“(C) was rented as a single dwelling unit on a regular basis during 2 of the taxable years in the 5 taxable year period ending with the taxable year in which the property was sold or exchanged.

“(2) REGULAR BASIS.—For purposes of paragraph (1)(C), property shall not be treated as rented on a regular basis during any taxable year unless—

“(A) such property is rented on the basis of months or longer periods, and

“(B) such property is rented for not less than 6 months of such year.

“(d) Exception for nonresident alien individuals.—No credit shall be allowed under subsection (a) to any taxpayer if such taxpayer is a nonresident alien individual.”.

(b) Clerical amendment.—The table of sections for part III of subchapter B of chapter 1 of such Code, as amended by this Act, is amended by inserting after the item relating to section 139D the following new item:


“Sec. 139E. Certain gains on single-family residential rental property.”.

(c) Effective date.—The amendments made by this section shall apply to property acquired after the date of the enactment of this Act.


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