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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1903 Introduced in House (IH)]

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 `33\1/3\ percent' for `6\2/3\ 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.
                                 <all>
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