S 376 ISCommentsClose CommentsPermalink

To provide rules for the modification or disposition of certain assets by real estate mortgage investment conduits pursuant to division A of the Emergency Economic Stabilization Act of 2008, and for other purposes.CommentsClose CommentsPermalink

February 4, 2009CommentsClose CommentsPermalink

Mr. REED (for himself, Mr. DODD, Mr. KERRY, Mr. SCHUMER, Ms. STABENOW, and Mr. KENNEDY) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban AffairsCommentsClose CommentsPermalink

To provide rules for the modification or disposition of certain assets by real estate mortgage investment conduits pursuant to division A of the Emergency Economic Stabilization Act of 2008, and for other purposes.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.

This Act may be cited as the ‘Real Estate Mortgage Investment Conduit Improvement Act of 2009’.CommentsClose CommentsPermalink

SEC. 2. SPECIAL RULES FOR MODIFICATION OR DISPOSITION OF QUALIFIED MORTGAGES OR FORECLOSURE PROPERTY BY REAL ESTATE MORTGAGE INVESTMENT CONDUITS.

(a) In General- If a REMIC (as defined in section 860D(a) of the Internal Revenue Code of 1986) modifies or disposes of a troubled asset under the Troubled Asset Relief Program established by the Secretary of the Treasury under section 101(a) of the Emergency Economic Stabilization Act of 2008 or under rules established by the Secretary under section 3 of this Act--CommentsClose CommentsPermalink





(1) such modification or disposition shall not be treated as a prohibited transaction under section 860F(a)(2) of such Code, andCommentsClose CommentsPermalink





(2) for purposes of part IV of subchapter M of chapter 1 of such Code--CommentsClose CommentsPermalink





(A) an interest in the REMIC shall not fail to be treated as a regular interest (as defined in section 860G(a)(1) of such Code) solely because of such modification or disposition, andCommentsClose CommentsPermalink





(B) any proceeds resulting from such modification or disposition shall be treated as amounts received under qualified mortgages.CommentsClose CommentsPermalink





(b) Termination of REMIC- For purposes of the Internal Revenue Code of 1986, an entity which is a REMIC (as defined in section 860D(a) of the Internal Revenue Code of 1986) shall cease to be a REMIC if the instruments governing the conduct of servicers or trustees with respect to qualified mortgages (as defined in section 860G(a)(3) of such Code) or foreclosure property (as defined in section 860G(a)(8) of such Code)--CommentsClose CommentsPermalink





(1) prohibit or restrict (including restrictions on the type, number, percentage, or frequency of modifications or dispositions) such servicers or trustees from reasonably modifying or disposing of such qualified mortgages or such foreclosure property in order to participate in the Troubled Asset Relief Program established by the Secretary of the Treasury under section 101(a) of the Emergency Economic Stabilization Act of 2008 or under rules established by the Secretary under section 3 of this Act,CommentsClose CommentsPermalink





(2) commit to a person other than the servicer or trustee the authority to prevent the reasonable modification or disposition of any such qualified mortgage or foreclosure property,CommentsClose CommentsPermalink





(3) require a servicer or trustee to purchase qualified mortgages which are in default or as to which default is reasonably foreseeable for the purposes of reasonably modifying such mortgages or as a consequence of such reasonable modification, orCommentsClose CommentsPermalink





(4) fail to provide that any duty a servicer or trustee owes when modifying or disposing of qualified mortgages or foreclosure property shall be to the trust in the aggregate and not to any individual or class of investors.CommentsClose CommentsPermalink





(c) Effective Dates-CommentsClose CommentsPermalink





(1) SUBSECTION (a)- Subsection (a) shall apply to modification and dispositions after the date of the enactment of this Act, in taxable years ending on or after such date.CommentsClose CommentsPermalink





(2) SUBSECTION (b)-CommentsClose CommentsPermalink





(A) IN GENERAL- Except as provided in subparagraph (B), subsection (b) shall take effect on the date that is 3 months after the date of the enactment of this Act.CommentsClose CommentsPermalink





(B) EXCEPTION- The Secretary of the Treasury may waive the application of subsection (b) in whole or in part for any period of time with respect to any entity if--CommentsClose CommentsPermalink





(i) the Secretary determines that such entity is unable to comply with the requirements of such subsection in a timely manner, orCommentsClose CommentsPermalink





(ii) the Secretary determines that such waiver would further the purposes of this Act.CommentsClose CommentsPermalink

SEC. 3. ESTABLISHMENT OF A HOME MORTGAGE LOAN RELIEF PROGRAM UNDER THE TROUBLED ASSET RELIEF PROGRAM AND RELATED AUTHORITIES.

(a) Establishment- Not later than 30 days after the date of enactment of this Act, the Secretary of the Treasury shall establish and implement a program under the Troubled Asset Relief Program and related authorities established under section 101(a) of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211(a))--CommentsClose CommentsPermalink





(1) to achieve appropriate broad-scale modifications or dispositions of troubled home mortgage loans; andCommentsClose CommentsPermalink





(2) to achieve appropriate broad-scale dispositions of foreclosure property.CommentsClose CommentsPermalink





(b) Rules- The Secretary of the Treasury shall promulgate rules governing the--CommentsClose CommentsPermalink





(1) reasonable modification of any home mortgage loan pursuant to the requirements of this Act; andCommentsClose CommentsPermalink





(2) disposition of any such home mortgage loan or foreclosed property pursuant to the requirements of this Act.CommentsClose CommentsPermalink





(c) Considerations- In developing the rules required under subsection (b), the Secretary of the Treasury shall take into consideration--CommentsClose CommentsPermalink





(1) the debt-to-income ratio, loan-to-value ratio, or payment history of the mortgagors of such home mortgage loans; andCommentsClose CommentsPermalink





(2) any other factors consistent with the intent to streamline modifications of troubled home mortgage loans into sustainable home mortgage loans.CommentsClose CommentsPermalink





(d) Use of Broad Authority- The Secretary of the Treasury shall use all available authorities to implement the home mortgage loan relief program established under this section, including, as appropriate--CommentsClose CommentsPermalink





(1) home mortgage loan purchases;CommentsClose CommentsPermalink





(2) home mortgage loan guarantees;CommentsClose CommentsPermalink





(3) making and funding commitments to purchase home mortgage loans or mortgage-backed securities;CommentsClose CommentsPermalink





(4) buying down interest rates and principal on home mortgage loans;CommentsClose CommentsPermalink





(5) principal forbearance; andCommentsClose CommentsPermalink





(6) developing standard home mortgage loan modification and disposition protocols, which shall include ratifying that servicer action taken in anticipation of any necessary changes to the instruments governing the conduct of servicers or trustees with respect to qualified mortgages or foreclosure property are consistent with the Secretary of the Treasury’s standard home mortgage loan modification and disposition protocols.CommentsClose CommentsPermalink





(e) Payments Authorized- The Secretary of the Treasury is authorized to pay servicers for home mortgage loan modifications or other dispositions consistent with any rules established under subsection (b).CommentsClose CommentsPermalink





(f) Rule of Construction- Any standard home mortgage loan modification and disposition protocols developed by the Secretary of the Treasury under this section shall be construed to constitute standard industry practice.CommentsClose CommentsPermalink