HR 1903 IHCommentsClose CommentsPermalink

To provide incentives for the residential housing market.CommentsClose CommentsPermalink

April 2, 2009CommentsClose CommentsPermalink

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 concernedCommentsClose CommentsPermalink

To provide incentives for the residential housing market.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title- This Act may be cited as the ‘Responsible Homeowners Act of 2009’.CommentsClose CommentsPermalink





(b) Table of Contents- The table of contents of this Act is as follows:CommentsClose CommentsPermalink





Sec. 1. Short title; table of contents.CommentsClose CommentsPermalink





Sec. 2. Stopping mortgage fraud.CommentsClose CommentsPermalink





Sec. 3. Tax credit for mortgage refinancing.CommentsClose CommentsPermalink





Sec. 4. Tax incentives for voluntary mortgage modifications.CommentsClose CommentsPermalink





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





Sec. 6. Credit for certain home purchases.CommentsClose CommentsPermalink





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

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.CommentsClose CommentsPermalink





(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--CommentsClose CommentsPermalink





(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; andCommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink

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:CommentsClose CommentsPermalink

‘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.CommentsClose CommentsPermalink





‘(b) Definitions- For purposes of this section--CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(e) Election- A taxpayer may elect to have subsection (a) not apply for any taxable year.CommentsClose CommentsPermalink





‘(f) Termination- This section shall not apply to any refinancing completed after June 30, 2010.’.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘Sec. 25E. Credit for mortgage refinancing.’.CommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink

SEC. 4. TAX INCENTIVES FOR VOLUNTARY MORTGAGE MODIFICATIONS.

(a) Exclusion of Qualified Appreciation Payments-CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink

‘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.CommentsClose CommentsPermalink





‘(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:CommentsClose CommentsPermalink





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





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





‘(A) A reduction in the interest rate of the loan.CommentsClose CommentsPermalink





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





‘(C) A reduction in the principal amount of the loan.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(c) Other Definitions and Special Rule- For purposes of this section--CommentsClose CommentsPermalink





‘(1) QUALIFIED MORTGAGE- The term ‘qualified mortgage’ means indebtedness--CommentsClose CommentsPermalink





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





‘(B) which fails to meet the requirement of subsection (b)(1).CommentsClose CommentsPermalink





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





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





‘(d) Termination- Subsection (a) shall not apply to any qualified mortgage workout which becomes legally binding after June 30, 2010.’.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘Sec. 139D. Mortgage modification income.’.CommentsClose CommentsPermalink





(b) Exclusion of Debt Cancelled Pursuant to a Qualified Mortgage Workout-CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘(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.’.CommentsClose CommentsPermalink





(2) BASIS REDUCTION- Subsection (h) of section 108 of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘subsection (a)(1)(E)’ in paragraph (1) and inserting ‘subparagraph (E) or (F) of subsection (a)(1)’, andCommentsClose CommentsPermalink





(B) by striking ‘Qualified’ in the heading of such subsection.CommentsClose CommentsPermalink





(3) COORDINATION OF EXCLUSIONS- Paragraph (2) of section 108(a) of such Code is amended--CommentsClose CommentsPermalink





(A) by striking ‘and (E)’ in subparagraph (A) and inserting ‘(E), and (F)’, andCommentsClose CommentsPermalink





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





‘(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.’.CommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink

SEC. 5. SERVICER SAFE HARBOR FOR MORTGAGE LOAN MODIFICATIONS.

(a) Safe Harbor-CommentsClose CommentsPermalink





(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--CommentsClose CommentsPermalink





(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;CommentsClose CommentsPermalink





(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); orCommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink





(2) ABILITY TO MODIFY MORTGAGES-CommentsClose CommentsPermalink





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





(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; andCommentsClose CommentsPermalink





(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,CommentsClose CommentsPermalink





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





(B) CRITERIA- The criteria under this subparagraph with respect to a mortgage are as follows:CommentsClose CommentsPermalink





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





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





(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.CommentsClose CommentsPermalink





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





(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.CommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink





(d) Definitions- For purposes of this section, the following definitions shall apply:CommentsClose CommentsPermalink





(1) SECRETARY- The term ‘Secretary’ means the Secretary of the Treasury.CommentsClose CommentsPermalink





(2) SECURITIZATION VEHICLE- The term ‘securitization vehicle’ means a trust, corporation, partnership, limited liability entity, special purpose entity, or other structure that--CommentsClose CommentsPermalink





(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; andCommentsClose CommentsPermalink





(B) holds such mortgages.CommentsClose CommentsPermalink

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:CommentsClose CommentsPermalink

‘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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(c) Definitions- For purposes of this section--CommentsClose CommentsPermalink





‘(1) ELIGIBLE PURCHASE- The term ‘eligible purchase’ means the purchase of a residence for the taxpayer if--CommentsClose CommentsPermalink





‘(A) such residence is located in the United States,CommentsClose CommentsPermalink





‘(B) the construction of such residence began before 2009, andCommentsClose CommentsPermalink





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





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





‘(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--CommentsClose CommentsPermalink





‘(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,CommentsClose CommentsPermalink





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





‘(3) the taxpayer is a nonresident alien individual, orCommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





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





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





‘(f) Carryforwards of Unused Credit-CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(g) Other Rules To Apply-CommentsClose CommentsPermalink





‘(1) RELATED PERSONS- Rules similar to the rules of section 26(c)(5) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(3) REPORTING- Rules similar to the rules of section 26(e) shall apply for purposes of this section.CommentsClose CommentsPermalink





‘(h) Recapture of Credit- Rules similar to the rules of section 26(f) shall apply for purposes of this section, except that--CommentsClose CommentsPermalink





‘(1) paragraph (1) thereof shall be applied by substituting ‘33 1/3 percent’ for ‘6 2/3 percent’, andCommentsClose CommentsPermalink





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





(b) Conforming Amendments-CommentsClose CommentsPermalink





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





(B) Section 24(b)(3)(B) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(C) Section 25(e)(1)(C)(ii) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(D) Section 25B(g)(2) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(E) Section 26(a)(1) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(F) Section 30(c)(2)(B)(ii) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(G) Section 30B(g)(2)(B)(ii) of such Code is amended by inserting ‘25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(H) Section 30D(c)(2)(B)(ii) of such Code is amended by striking ‘and 25D’ and inserting ‘, 25D, and 25F’.CommentsClose CommentsPermalink





(I) Section 904(i) of such Code is amended by inserting ‘25F,’ after ‘25B,’.CommentsClose CommentsPermalink





(2) Paragraph (1) of section 23(c) of such Code is amended by inserting ‘, 25F,’ after ‘25D,’.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘Sec. 25F. Credit for certain home purchases.’.CommentsClose CommentsPermalink





(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.CommentsClose CommentsPermalink

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:CommentsClose CommentsPermalink

‘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.CommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(c) Qualified Single-Family Residential Rental Property- For purposes of this section--CommentsClose CommentsPermalink





‘(1) IN GENERAL- The term ‘qualified property’ means any real property located in the United States which--CommentsClose CommentsPermalink





‘(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,CommentsClose CommentsPermalink





‘(B) was held by the taxpayer for 2 years or more, andCommentsClose CommentsPermalink





‘(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.CommentsClose CommentsPermalink





‘(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--CommentsClose CommentsPermalink





‘(A) such property is rented on the basis of months or longer periods, andCommentsClose CommentsPermalink





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





‘(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.’.CommentsClose CommentsPermalink





(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:CommentsClose CommentsPermalink





‘Sec. 139E. Certain gains on single-family residential rental property.’.CommentsClose CommentsPermalink





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