II 

112TH CONGRESS 

2D SESSION S. 3224 

To amend the Internal Revenue Code of 1986 to prevent an unfair tax 

burden for veterans and homeowners who have received assistance from 

the National Mortgage Settlement, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2012 

Ms. STABENOW introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to prevent 

an unfair tax burden for veterans and homeowners who 

have received assistance from the National Mortgage Settlement, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Homeowners and Mili5 tary Families Tax Fairness Act’’. 


tjames on DSK6SPTVN1PROD with BILLS
2 

•S 3224 IS

1 SEC. 2. EXTENSION OF INCOME EXCLUSION FOR DIS2 CHARGE OF QUALIFIED PRINCIPAL RESI3 DENCE INDEBTEDNESS. 

4 (a) IN GENERAL.—Subparagraph (E) of section 

5 108(a)(1) of the Internal Revenue Code of 1986 is amend6 ed by striking ‘‘January 1, 2013’’ and inserting ‘‘January 

7 1, 2016’’. 

8 (b) APPLICATION TO CERTAIN AGREEMENTS.—Sub9 paragraph (E) of section 108(a)(1) of the Internal Rev10 enue Code of 1986, as amended by subsection (a), is 

11 amended by inserting before the period the following: ‘‘, 

12 or which is discharged after such date pursuant to an 

13 agreement entered into before such date under the pro14 grams created pursuant to, or using funds authorized by 

15 the Emergency Economic Stabilization Act of 2008’’. 

16 (c) EFFECTIVE DATE.— 

17 (1) SUBSECTION (a).—The amendment made 

18 by subsection (a) shall apply to discharges in taxable 

19 years beginning after December 31, 2012. 

20 (2) SUBSECTION (b).—The amendment made 

21 by subsection (b) shall take effect on the date of the 

22 enactment of this Act. 

23 SEC. 3. EXTENSION OF DEDUCTION FOR MORTGAGE INSUR24 ANCE PREMIUMS. 

25 (a) IN GENERAL.—Subclause (I) of section 

26 163(h)(3)(E)(i) of the Internal Revenue Code of 1986 is 


tjames on DSK6SPTVN1PROD with BILLS
3 

•S 3224 IS

1 amended by striking ‘‘December 31, 2011’’ and inserting 

2 ‘‘December 31, 2012’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to amounts paid or accrued after 

5 December 31, 2011. 

6 SEC. 4. EXCLUSIONS RELATING TO NATIONAL MORTGAGE 

7 SETTLEMENT PAYMENTS. 

8 (a) IN GENERAL.—Part III of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 is amended 

10 by inserting after section 139D the following new section: 

11 ‘‘SEC. 139E. NATIONAL MORTGAGE SETTLEMENT. 

12 ‘‘(a) GENERAL RULE.—In the case of an individual, 

13 gross income shall not include any National Mortgage Set14 tlement amount. 

15 ‘‘(b) NATIONAL MORTGAGE SETTLEMENT AMOUNT

16 DEFINED.—For purposes of subsection (a), the term ‘Na17 tional Mortgage Settlement amount’ means, with respect 

18 to any amount received under the National Mortgage Set19 tlement, an amount which is— 

20 ‘‘(1) a payment for transitional assistance, 

21 ‘‘(2) a payment from the Borrower Payment 

22 Fund under the National Mortgage Settlement to a 

23 borrower whose home was finally sold or taken in 

24 foreclosure after December 31, 2007, and before 

25 January 1, 2012, and 


tjames on DSK6SPTVN1PROD with BILLS
4 

•S 3224 IS

1 ‘‘(3) a payment received as a result of a fore2 closure that the Attorney General of the United 

3 States has determined was not in compliance with 

4 the Servicemembers Civil Relief Act. 

5 ‘‘(c) DISREGARD OF REFUND OF EXCESS MORTGAGE

6 INTEREST AND RELATED DAMAGES.—In the case of an 

7 individual, the amount of interest refunded and damages 

8 paid for excess charges of mortgage interest under the Na9 tional Mortgage Settlement with respect to a wrongful 

10 foreclosure described in subsection (b)(3)— 

11 ‘‘(1) shall be disregarded for purposes of this 

12 chapter, and 

13 ‘‘(2) no adjustment of the deduction allowable 

14 under section 163(h) shall be made as a result of 

15 such refund. 

16 ‘‘(d) NATIONAL MORTGAGE SETTLEMENT.—For pur17 poses of this section, the term ‘National Mortgage Settle18 ment’ means any consent agreement entered into in settle19 ment of the action entitled ‘The United States of America, 

20 et al. against Bank of America Corporation, et al.’, filed 

21 in the United States District Court for the District of Co22 lumbia on March 12, 2012 (case numbered 1:12-cv-00361- 

23 RMC).’’. 

24 (b) DENIAL OF BUSINESS DEDUCTION FOR CERTAIN

25 PAYMENTS.—Section 162 of the Internal Revenue Code 


tjames on DSK6SPTVN1PROD with BILLS
5 

•S 3224 IS

1 of 1986 is amended by redesignating subsection (q) as 

2 subsection (r) and by inserting after subsection (p) the 

3 following new subsection: 

4 ‘‘(q) NATIONAL MORTGAGE SETTLEMENT.— 

5 ‘‘(1) IN GENERAL.—No deduction shall be al6 lowed under this chapter for any National Mortgage 

7 Settlement amount that was paid in exchange for a 

8 full release of the United States’ potential civil 

9 claims under the Servicemembers Civil Relief Act. 

10 ‘‘(2) NATIONAL MORTGAGE SETTLEMENT

11 AMOUNT.—The term ‘National Mortgage Settlement 

12 amount’ has the meaning given such term by section 

13 139E.’’. 

14 (c) CLERICAL AMENDMENT.—The table of sections 

15 for part III of subchapter B of chapter 1 of the Internal 

16 Revenue Code of 1986 is amended by inserting after the 

17 item relating to section 139D the following new item: 

‘‘Sec. 139E. National Mortgage settlement.’’. 

18 (d) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years ending after 

20 March 12, 2012. 

Æ 


tjames on DSK6SPTVN1PROD with BILLS