I 

111TH CONGRESS 

2D SESSION H. R. 6562 

To revitalize home ownership by establishing a shared equity appreciation 

homeownership pilot program. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 21, 2010 

Ms. CORRINE BROWN of Florida introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the 

Committee on Ways and Means, 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 revitalize home ownership by establishing a shared equity 

appreciation homeownership pilot program. 

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 ‘‘American Residential 

5 Housing Recovery Act of 2010’’. 

6 SEC. 2. DECLARATION OF PURPOSE. 

7 The Congress hereby declares that a national emer8 gency exists that is producing widespread disruption of the 

9 owned residential real estate markets, which burdens 


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1 interstate and foreign commerce, affects the public wel2 fare, and undermines the standard of living of the Amer3 ican people. The Congress hereby declares a national pol4 icy to remove obstructions to the free flow of interstate 

5 and foreign commerce in the owned residential housing 

6 sector of the American economy; and to provide for the 

7 general welfare by promoting the flow of equity capital 

8 into the residential housing sector through innovative 

9 methods, including the use of shared equity appreciation 

10 financing methods. 

11 SEC. 3. SHARED EQUITY APPRECIATION PILOT PROGRAM. 

12 (a) ESTABLISHMENT.—The Secretary of the Treas13 ury (in this section referred to as the ‘‘Secretary’’) shall 

14 carry out a shared equity appreciation financing pilot pro15 gram under this section to analyze the effectiveness, in16 cluding as a step in the economic recovery of the United 

17 States, of shared equity finance methods that stimulate 

18 the flow of private equity capital into the housing sector, 

19 while mitigating risk to borrowers. 

20 (b) STRUCTURE.—Under the pilot program under 

21 this section, the Secretary shall— 

22 (1) provide for entities, individuals, and govern23 mental agencies to assist homeowners to acquire, re24 finance, or maintain ownership of 1- to 4-family 

25 residences with funding provided through shared eqVerDate Mar 15 2010 04:15 Dec 22, 2010 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6562.IH H6562

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1 uity appreciation arrangements under which private 

2 or public sector investors, or both, invest equity 

3 funds for such residences and thereby share in the 

4 equity appreciation of such residences; 

5 (2) encourage public and private sector invest6 ment in such shared equity appreciation arrange7 ments through— 

8 (A) provision of upfront financial assist9 ance to participants in the pilot program, in10 cluding payments for administrative expenses 

11 and operating capital; 

12 (B) insurance under subsection (h) of risks 

13 of loss to private investors in such arrange14 ments; 

15 (C) direct investment by public investors in 

16 contracts for such arrangements; and 

17 (D) tax credits to private investors in such 

18 arrangements under section 45S of the Internal 

19 Revenue Code of 1986 (as added by subsection 

20 (g)); and 

21 (3) evaluate the effectiveness of whether the ac22 tions taken by the Secretary under the pilot program 

23 pursuant to paragraph (2) encourage investment in 

24 shared equity appreciation arrangements. 

25 (c) APPLICATION AND SELECTION.— 


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1 (1) ELIGIBILITY AND APPLICATIONS.—The Sec2 retary shall establish eligibility requirements for fi3 nancial institutions, nonprofit organizations, housing 

4 associations, investment pools, and other appropriate 

5 public and private capital sources and individuals to 

6 participate in the pilot program under this section 

7 and originate agreements for shared equity apprecia8 tion arrangements under the program, and shall pro9 vide for eligible entities and individuals to apply to 

10 the Secretary for such participation. Such applica11 tions shall include such information as the Secretary 

12 considers appropriate. 

13 (2) SELECTION; CRITERIA.—Not later than 180 

14 days after the date of the enactment of this Act, the 

15 Secretary shall select participants in the pilot pro16 gram, from among persons applying for such partici17 pation, using criteria established by the Secretary, 

18 which shall include— 

19 (A) whether, under the pilot program, the 

20 applicant— 

21 (i) can provide relief to homeowners 

22 without modifying the original mortgage 

23 and securitization; 


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1 (ii) can provide homeowners with a 

2 long-term stimulus for as long as the 

3 shared equity arrangement is in effect; 

4 (iii) will empower homeowners to have 

5 a stake in the solution; 

6 (iv) has a streamlined process for 

7 originating and servicing contracts under 

8 the pilot program for shared equity appre9 ciation arrangements; 

10 (v) can materially reduce default and 

11 foreclosure risk on mortgages of home12 owners; 

13 (vi) can effectively reduce interest 

14 rates on mortgages of homeowners; 

15 (vii) can effectively reduce debt-to-in16 come ratios and re-default rates on mort17 gages of homeowners; 

18 (viii) will credit homeowners with 100 

19 percent of the increase in the value of 

20 homeowners’ residences resulting from im21 provements made to their properties; 

22 (ix) will provide periodic payments 

23 based on current home value to the home24 owners or to the homeowners’ lenders on 

25 behalf of the homeowner; 


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1 (x) will make equity-sharing payments 

2 available to new home purchasers to in3 crease the percentage of approved loan ap4 plications; and 

5 (xi) will make equity-sharing pay6 ments available to senior homeowners to 

7 reduce the rate of forced sales of their 

8 properties; 

9 (B) whether investors in mortgage-backed 

10 securities deem equity-sharing payments to 

11 homeowners under the applicant’s program as 

12 an incentive to providing principal forbearance; 

13 (C) whether mortgage loan servicers deem 

14 equity-sharing payments to homeowners under 

15 the applicant’s program as a suitable loss miti16 gation tool; 

17 (D) whether institutions regulated under 

18 the Community Reinvestment Act of 1977 (12 

19 U.S.C. 2901) and the Federal financial super20 visory agencies deem equity-sharing payments 

21 to homeowners as an investment eligible for 

22 credit under such Act; and 

23 (E) whether providing Government-spon24 sored insurance against loss in property value 


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1 under the applicant’s program will increase par2 ticipation by private investors. 

3 (d) LIMITATION TO PRINCIPAL RESIDENCE.—Only 

4 mortgages for residences that are occupied as the principal 

5 residence of the mortgagee shall be eligible under the pilot 

6 program under this section. 

7 (e) RIGHTS OF PARTIES.—The Secretary shall estab8 lish the rights, privileges and responsibilities of the respec9 tive parties to transactions under the pilot program under 

10 this section. 

11 (f) GEOGRAPHIC DIVERSITY.—The Secretary shall 

12 carry out the pilot program on a regional basis in five re13 gional areas of the United States, as follows: 

14 (1) NORTHEAST.—The Northeast region, con15 sisting of the States of Connecticut, Delaware, 

16 Maine, Maryland, Massachusetts, New Hampshire, 

17 New Jersey, New York, Pennsylvania, Rhode Island 

18 and Vermont. 

19 (2) SOUTHEAST.—The Southeast region, con20 sisting of the States of Alabama, Florida, Georgia, 

21 Mississippi, North Carolina, South Carolina, Ten22 nessee, Virginia, and West Virginia, and the District 

23 of Columbia. 

24 (3) CENTRAL.—The Central region, consisting 

25 of the States of Arkansas, Illinois, Indiana, Iowa, 


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1 Kansas, Kentucky, Louisiana, Michigan, Missouri, 

2 Nebraska, Ohio, and Wisconsin. 

3 (4) SOUTHWEST.—The Southwest region, con4 sisting of the States of Arizona, California, Colo5 rado, Hawaii, Nevada, New Mexico, Oklahoma, and 

6 Texas. 

7 (5) NORTHWEST.—The Northwest region, con8 sisting of the States of Alaska, Idaho, Minnesota, 

9 Montana, North Dakota, Oregon, South Dakota, 

10 Utah, Washington, and Wyoming. 

11 (g) TAX CREDIT FOR PRIVATE INVESTMENT IN

12 SHARED EQUITY APPRECIATION CONTRACTS.— 

13 (1) IN GENERAL.—Subpart D of part IV of 

14 subchapter A of chapter 1 of the Internal Revenue 

15 Code of 1986 is amended by adding at the end the 

16 following new section: 

17 ‘‘SEC. 45S. CREDIT FOR PRIVATE INVESTMENT IN SHARED 

18 EQUITY APPRECIATION CONTRACTS. 

19 ‘‘For purposes of section 38, the shared equity appre20 ciation contract credit determined under this section for 

21 the taxable year is 39 percent of the aggregate amount 

22 paid or incurred by the taxpayer during such taxable year 

23 as an investment in any shared appreciation contract of 

24 a participant in the pilot program under the American 

25 Residential Housing Recovery Act of 2010.’’. 


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1 (2) CREDIT TO BE PART OF GENERAL BUSI2 NESS CREDIT.—Subsection (b) of section 38 of such 

3 Code is amended by striking ‘‘plus’’ at the end of 

4 paragraph (35), by striking the period at the end of 

5 paragraph (36) and inserting ‘‘, plus’’ , and by add6 ing at the end the following new paragraph: 

7 ‘‘(37) the shared equity appreciation contract 

8 credit determined under section 45S(a).’’. 

9 (3) CLERICAL AMENDMENT.—The table of sec10 tions for subpart D of part IV of subchapter A of 

11 chapter 1 of such Code is amended by adding at the 

12 end the following new item: 

‘‘Sec. 45S. Credit for private investment in shared equity appreciation contracts.’’. 

13 (4) EFFECTIVE DATE.—The amendments made 

14 by this subsection shall apply to taxable years end15 ing after the date of the enactment of this Act. 

16 (h) INSURANCE OF RISKS TO INVESTORS.—From any 

17 amounts made available for carrying out the pilot program 

18 under this section, the Secretary shall set aside amounts 

19 sufficient to insure investments of private funds in shared 

20 equity appreciation arrangements fully against any losses 

21 arising from participation in the pilot program. 

22 (i) MONITORING AND REPORTING.— 

23 (1) MONITORING.—The Secretary shall provide 

24 for such monitoring under the pilot program under 


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1 this section as may be necessary and appropriate to 

2 determine its effectiveness, and the structure and re3 quirements of such monitoring. 

4 (2) REPORTS TO CONGRESS.—Not later than 

5 the expiration of the 18-month period beginning on 

6 the date of the enactment of this Act, the Comp7 troller General of the United States shall submit a 

8 report to the Congress analyzing effectiveness of the 

9 pilot program under this section and making rec10 ommendations regarding expansion or improvements 

11 thereof. 

12 (j) WAIVER.—The Secretary may waive, or specify al13 ternative requirements for, any provision of any statute, 

14 regulation, or guideline that the Secretary administers 

15 upon a determination by the Secretary that such waiver 

16 is appropriate to carry out the pilot program under this 

17 section. 

18 (k) AUTHORIZATION OF APPROPRIATIONS.—There is 

19 authorized to be appropriated for assistance under the 

20 pilot program under this section and any costs of carrying 

21 out this section such sums as may be necessary for each 

22 of fiscal years 2010 through 2015. 


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1 SEC. 4. REGULATORY OVERSIGHT OF SHARED EQUITY AP2 PRECIATION CONTRACTS BY BUREAU OF 

3 CONSUMER FINANCIAL PROTECTION. 

4 (a) TREATMENT AS CONSUMER FINANCIAL PROD5 UCT.—Section 1002 of the Dodd-Frank Wall Street Re6 form and Consumer Protection Act (12 U.S.C. 5481) is 

7 amended— 

8 (1) in paragraph (5)— 

9 (A) in subparagraph (A), by striking ‘‘or’’ 

10 at the end; 

11 (B) in subparagraph (B), by striking the 

12 period at the end and inserting ‘‘or’’; and 

13 (C) by adding at the end the following new 

14 subparagraph: 

15 ‘‘(C) is a shared equity appreciation con16 tract’’; 

17 (2) by redesignating paragraphs (27) through 

18 (29) as paragraphs (28) through (30), respectively; 

19 and 

20 (3) by inserting after paragraph (26) the fol21 lowing new paragraph: 

22 ‘‘(27) SHARED EQUITY APPRECIATION CON23 TRACT.—The term ‘shared equity appreciation con24 tract’ means an agreement between private or public 

25 sector investors, or both, and homeowners under 

26 which such investors provide funds to assist the 


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1 homeowners to acquire, refinance, or maintain own2 ership of 1- to 4-family residences and under which 

3 the investors share in the equity appreciation of such 

4 residence.’’. 

5 (b) OVERSIGHT.—Subtitle C of title X of the Dodd6 Frank Wall Street Reform and Consumer Protection Act 

7 is amended— 

8 (1) by redesignating section 1037 (12 U.S.C. 

9 5531 note) as section 1038; and 

10 (2) by inserting after section 1036 (12 U.S.C. 

11 5536) the following new section: 

12 ‘‘SEC. 1037. SHARED EQUITY APPRECIATION CONTRACTS. 

13 ‘‘In carrying out its duties under this title with re14 spect to shared equity appreciation contracts, the Bureau 

15 shall issue and enforce regulations governing the establish16 ment and servicing of shared appreciation contracts to en17 sure that— 

18 ‘‘(1) consumers receive clear and balanced in19 formation about the risks and benefits of shared eq20 uity appreciation financing, including information 

21 about available alternatives; 

22 ‘‘(2) appropriate eligibility and underwriting 

23 guidelines are applied; 

24 ‘‘(3) consumers demonstrate they understand 

25 their rights and obligations, as well as the risks and 


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1 benefits, before entering into shared equity apprecia2 tion contracts; 

3 ‘‘(4) consumers receive qualified independent 

4 counseling before entering into shared equity appre5 ciation contracts; 

6 ‘‘(5) the terms of such contracts, including pric7 ing, homeowner payments and percentage of equity 

8 shared, are not predatory; 

9 ‘‘(6) consumers are protected from being sold 

10 shared equity contracts to fund inappropriate annu11 ities, investments, and other financial products, 

12 ‘‘(7) contract portfolio and individual loan level 

13 audit review standards are established and followed; 

14 and 

15 ‘‘(8) shared equity appreciation contract pro16 viders are certified for financial strength, comply 

17 with rules and regulations promulgated by the Bu18 reau, and follow procurement policies consistent with 

19 public sector practice.’’. 

Æ 


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