I 

111TH CONGRESS 

1ST SESSION H. R. 906 

To provide incentives for affordable housing. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 4, 2009 

Mrs. TAUSCHER (for herself, Mr. CARDOZA, Ms. ZOE LOFGREN of California, 

Ms. BERKLEY, and Mr. HINCHEY) 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 provide incentives for affordable housing. 

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 AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Housing Disaster Area Foreclosure Prevention Act of 

6 2009’’. 

7 (b) TABLE OF CONTENTS.—The table of contents for 

8 this Act is as follows: 

Sec. 1. Short title and table of contents. 


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TITLE I—EXPANSION OF STATE FORECLOSURE MITIGATION 

PROGRAMS 

Sec. 101. Stabilization of the mortgage revenue bond market. 

Sec. 102. TARP assistance for refinancing underwater mortgages. 

Sec. 103. Interest rate buy-down for refinancing mortgages and new mortgages 

for homes in areas served by State housing finance agency 

foreclosure prevention programs. 

Sec. 104. HUD action to increase access to mortgage insurance by State housing finance agencies. 

Sec. 105. State reports on use of refinancing bond authority. 

TITLE II—HOUSING TAX INCENTIVES 

Sec. 201. Temporary increase in volume cap for housing bonds issued for areas 

most affected by foreclosure crisis. 

Sec. 202. Extension of time for using increased volume cap for housing bonds. 

Sec. 203. Expansion of use of mortgage revenue bonds for mortgage refinancing loans. 

Sec. 204. Alternative minimum tax limitations not applicable to refinancings of 

tax-exempt housing bonds. 

Sec. 205. Clarification of applicability to high foreclosure impact areas. 

1 TITLE I—EXPANSION OF STATE 

2 FORECLOSURE MITIGATION 

3 PROGRAMS 

4 SEC. 101. STABILIZATION OF THE MORTGAGE REVENUE 

5 BOND MARKET. 

6 The Secretary of the Treasury shall take all nec7 essary steps to support the mortgage revenue bond mar8 ket, including the use of amounts made available under 

9 title I of the Emergency Economic Stabilization Act of 

10 2008 to purchase mortgage revenue bonds (as defined in 

11 section 143 of the Internal Revenue Code of 1986) at a 

12 rate of interest that makes the housing programs carried 

13 out with the proceeds of such bonds economically feasible. 


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1 SEC. 102. TARP ASSISTANCE FOR REFINANCING UNDER2 WATER MORTGAGES. 

3 (a) AUTHORITY.—The Secretary of the Treasury 

4 shall carry out a program to use amounts specified in sub5 section (e) to reduce the outstanding debt on qualifying 

6 existing underwater mortgages in connection with the refi7 nancing of such mortgages. 

8 (b) QUALIFYING EXISTING UNDERWATER MORT9 GAGES.—For purposes of this section, the term ‘‘quali10 fying existing underwater mortgage’’ means a mortgage 

11 or mortgages on a 1- to 4-family owner-occupied residen12 tial property that has an appraised value that is less than 

13 the outstanding obligation under such mortgage or mort14 gages. 

15 (c) TERMS OF REFINANCING MORTGAGE.—The Sec16 retary may use amounts under the program under this 

17 section only with respect to qualifying existing underwater 

18 mortgages that are refinanced under a mortgage that is 

19 eligible to be financed with the proceeds of a mortgage 

20 revenue bond pursuant to section 143(k)(12) of the Inter21 nal Revenue Code of 1986. 

22 (d) RECAPTURE OF ASSISTANCE AMOUNTS.—In 

23 making assistance available under the program under this 

24 section with respect to a qualifying existing underwater 

25 mortgage, the Secretary shall take such actions and enter 

26 into such binding agreements as are necessary to provide 


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1 for recovery by the Secretary, upon any sale of the residen2 tial property subsequent to the refinancing of the mort3 gage under such program, of the lesser of— 

4 (1) an amount equal to 50 percent of any pro5 ceeds of the sale in excess of the amount necessary 

6 to fully pay any outstanding obligations, including 

7 interest, under the refinanced mortgage; or 

8 (2) the amount of assistance provided under the 

9 program with respect to such mortgage. 

10 (e) USE OF TARP AMOUNTS.—Of any amounts 

11 made available under title I of the Emergency Economic 

12 Stabilization Act of 2008 (12 U.S.C. 5211 et seq.), the 

13 Secretary of the Treasury shall reserve for use only under 

14 the program under this section, and shall use only under 

15 such program, amounts sufficient to provide assistance 

16 under the program in connection with any mortgage refi17 nanced with the proceeds of a mortgage revenue bond pur18 suant to section 143(k)(12) of the Internal Revenue Code 

19 of 1986. 


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1 SEC. 103. INTEREST RATE BUY-DOWN FOR REFINANCING 

2 MORTGAGES AND NEW MORTGAGES FOR 

3 HOMES IN AREAS SERVED BY STATE HOUS4 ING FINANCE AGENCY FORECLOSURE PRE5 VENTION PROGRAMS. 

6 (a) AUTHORITY.—The Federal National Mortgage 

7 Association and the Federal Home Loan Mortgage Cor8 poration shall each carry out a program under this section 

9 to purchase and securitize qualified refinancing mortgages 

10 and qualified new mortgages on single-family housing, in 

11 accordance with this section and policies and procedures 

12 that the Director of the Federal Housing Finance Agency 

13 shall establish. 

14 (b) PURCHASE OF QUALIFIED MORTGAGES.— 

15 (1) REQUIREMENT TO PURCHASE.—If a lender 

16 proffers to an enterprise, in accordance with require17 ments established by the Director, a mortgage or 

18 mortgages for purchase under this section, the en19 terprise shall make a determination of whether such 

20 mortgage or mortgages are qualified mortgages. 

21 Subject to subsection (h), if the enterprise deter22 mines that such mortgage or mortgages meet the re23 quirements for qualified mortgages, the enterprise 

24 shall make a commitment to purchase, and shall 

25 purchase, the mortgage or mortgages. 


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1 (2) ADVANCE COMMITMENTS.—The Director 

2 shall require each enterprise to establish a procedure 

3 for approval of lenders to receive commitments, in 

4 advance of the origination of qualified mortgages, 

5 for purchase of such mortgages under this section by 

6 the enterprise. 

7 (c) QUALIFIED MORTGAGES.— 

8 (1) QUALIFIED MORTGAGE.—For purposes of 

9 this section, the term ‘‘qualified mortgage’’ means a 

10 mortgage that is a qualified refinancing mortgage or 

11 a qualified new mortgage. 

12 (2) QUALIFIED REFINANCING MORTGAGE.—For 

13 purposes of this section, the term ‘‘qualified refi14 nancing mortgage’’ means a mortgage that meets 

15 the following requirements: 

16 (A) SINGLE-FAMILY HOUSING IN HOUSING

17 DISTRESS AREAS SERVED BY STATE HOUSING

18 FINANCE AGENCY FORECLOSURE REDUCTION

19 PROGRAMS.—The property subject to the mort20 gage shall be a residence as defined in section 

21 143 of the Internal Revenue Code of 1986 that 

22 is located within a qualified census tract or area 

23 of chronic economic distress (within the mean24 ing given such terms in section 143(j) of such 

25 Code) that is located within a foreclosure crisis 


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1 State (as such term is defined in section 

2 146(d)(6) of such Code). 

3 (B) PRINCIPAL RESIDENCE.—The mort4 gagor under the mortgage shall satisfy the re5 quirement in section 143(c)(1) of the Internal 

6 Revenue Code of 1986. 

7 (C) REFINANCING.—The principal loan 

8 amount repayment of which is secured by the 

9 mortgage shall be used to satisfy all indebted10 ness under an existing first mortgage that— 

11 (i) was made for purchase of, or refi12 nancing another first mortgage on, the 

13 same property that is subject to the quali14 fied refinancing mortgage; and 

15 (ii) was originated on or before Janu16 ary 1, 2008. 

17 (D) INTEREST RATE; TERM TO MATU18 RITY.—The mortgage shall— 

19 (i) bear interest at a single annual 

20 rate that is fixed for the entire term of the 

21 mortgage, which shall not exceed the an22 nual rate that is 100 basis points less than 

23 the prevailing annual interest rate for 

24 mortgages of similar type and term to ma25 turity, as determined by the Director; and 


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1 (ii) have a term to maturity of not 

2 less than 30 years and not more than 40 

3 years from the date of the beginning of the 

4 amortization of the mortgage. 

5 (E) UNDERWRITING STANDARDS.—The 

6 mortgage shall meet such underwriting stand7 ards as the Director shall require. 

8 (F) WAIVER OF PREPAYMENT PEN9 ALTIES.—All penalties for prepayment or refi10 nancing of the underlying mortgage refinanced 

11 by the mortgage, and all fees and penalties re12 lated to the default or delinquency on such 

13 mortgage, shall have been waived or forgiven. 

14 (3) QUALIFIED NEW MORTGAGE.—For purposes 

15 of this section, the term ‘‘qualified new mortgage’’ 

16 means a mortgage that meets the following require17 ments: 

18 (A) TERMS.—The mortgage meets the re19 quirements under subparagraphs (A), (B), (D), 

20 and (E) of paragraph (2). 

21 (B) HOME PURCHASE.—The principal loan 

22 amount repayment of which is secured by the 

23 mortgage shall be used to purchase the prop24 erty that is subject to the qualified new mort25 gage. 


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1 (C) NEW MORTGAGES.—The mortgage was 

2 originated on or after the date of the enactment 

3 of this Act. 

4 (d) EXCEPTIONS TO UNDERWRITING STANDARDS.— 

5 Each enterprise shall establish such exceptions to the un6 derwriting standards of the enterprise, including downpay7 ment and credit rating standards, that conform to the un8 derwriting standards established pursuant to subsection 

9 (c)(2)(E), as may be necessary to allow the enterprise to 

10 purchase and securitize qualified refinancing mortgages 

11 and qualified new mortgages under this section, in accord12 ance with such requirements as the Director shall estab13 lish. 

14 (e) SECURITIZATION.— 

15 (1) REQUIREMENT.—Each enterprise shall, 

16 upon such terms and conditions as it may prescribe, 

17 set aside any qualified mortgages purchased by it 

18 under this section and, upon approval of the Sec19 retary of the Treasury, issue and sell securities 

20 based upon such mortgages set aside. 

21 (2) FORM.—Securities issued under this sub22 section may be in the form of debt obligations or 

23 trust certificates of beneficial interest, or both. 

24 (3) TERMS.—Securities issued under this sub25 section shall have such maturities and bear such 


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1 rate or rates of interest as may be determined by the 

2 enterprise with the approval of the Secretary. 

3 (4) EXEMPTION.—Securities issued by an en4 terprise under this subsection shall, to the same ex5 tent as securities which are direct obligations of or 

6 obligations guaranteed as to principal and interest 

7 by the United States, be deemed to be exempt secu8 rities within the meaning of laws administered by 

9 the Securities and Exchange Commission. 

10 (5) PRINCIPAL AND INTEREST PAYMENTS.— 

11 Mortgages set aside pursuant to this subsection shall 

12 at all times be adequate to enable the issuing enter13 prise to make timely principal and interest payments 

14 on the securities issued and sold pursuant to this 

15 subsection. 

16 (6) REQUIRED DISCLOSURE.—Each enterprise 

17 shall insert appropriate language in all of the securi18 ties issued under this subsection clearly indicating 

19 that such securities, together with the interest there20 on, are not guaranteed by the United States and do 

21 not constitute a debt or obligation of the United 

22 States or any agency or instrumentality thereof 

23 other than the enterprise. 

24 (f) FEDERAL RESERVE FINANCING FACILITY.—The 

25 Secretary of the Treasury shall establish a credit facility 


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1 of the Federal Reserve System to make credit available 

2 to the enterprises at interest rates comparable to rates on 

3 securities issued by the Secretary of the Treasury under 

4 chapter 31 of title 31, United States Code, and having 

5 comparable terms, as determined by the Board. 

6 (g) DEFINITIONS.—For purposes of this Act, the fol7 lowing definitions shall apply: 

8 (1) DIRECTOR.—The term ‘‘Director’’ means 

9 the Director of the Federal Housing Finance Agen10 cy. 

11 (2) ENTERPRISE.—The term ‘‘enterprise’’ 

12 means the Federal National Mortgage Association 

13 and the Federal Home Loan Mortgage Corporation. 

14 (3) SECRETARY.—The term ‘‘Secretary’’ means 

15 the Secretary of the Treasury. 

16 (h) TERMINATION.—The requirement under sub17 section (b)(1) for the enterprises to purchase mortgages 

18 shall not apply to any mortgage proffered to an enterprise 

19 after December 31, 2010. 

20 SEC. 104. HUD ACTION TO INCREASE ACCESS TO MORT21 GAGE INSURANCE BY STATE HOUSING FI22 NANCE AGENCIES. 

23 The Secretary of Housing and Urban Development 

24 shall take all necessary actions, in consultation and coordi25 nation with State housing finance agencies, to increase acVerDate Nov 24 2008 00:44 Feb 08, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H906.IH H906

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1 cess by such agencies to mortgage insurance for the pur2 pose of making such insurance available in connection with 

3 mortgages financed by bonds issued by such agencies pur4 suant to this Act and the amendments made by this Act. 

5 SEC. 105. STATE REPORTS ON USE OF REFINANCING BOND 

6 AUTHORITY. 

7 Not later than the expiration of the 6-month period 

8 beginning upon the date of the enactment of this Act and 

9 every six months thereafter until the refinancing bond au10 thority provided by the amendments made by title II of 

11 this Act has been exhausted, each State using the refi12 nancing authority provided by the amendments made by 

13 section 3021 of the Housing and Economic Recovery Act 

14 of 2008 (Public Law 110–289; 122 Stat. 2892) shall sub15 mit a report to the Congress specifying— 

16 (1) the amount of the refinancing bond author17 ity provided for the State under the amendments 

18 made by such section 3021 and title II of this Act 

19 that remains; 

20 (2) the number of homes that have been refi21 nanced using such refinancing authority of the 

22 State; and 

23 (3) the counties and municipalities in the State 

24 in which homes are located that are subject to mort25 gages refinanced using such refinancing authority 


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1 and the amount of such authority used with respect 

2 to each such county and municipality. 

3 TITLE II—HOUSING TAX 

4 INCENTIVES 

5 SEC. 201. TEMPORARY INCREASE IN VOLUME CAP FOR 

6 HOUSING BONDS ISSUED FOR AREAS MOST 

7 AFFECTED BY FORECLOSURE CRISIS. 

8 (a) IN GENERAL.—Subsection (d) of section 146 of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(6) INCREASE AND SET ASIDE FOR HOUSING

12 BONDS FOR 2009.— 

13 ‘‘(A) INCREASE OF 2009.—In the case of 

14 calendar year 2009, the State ceiling for each 

15 foreclosure crisis State shall be increased by the 

16 sum of— 

17 ‘‘(i) an amount equal to 

18 $10,000,000,000 multiplied by a frac19 tion— 

20 ‘‘(I) the numerator of which is 

21 the number of foreclosures in such 

22 State, and 

23 ‘‘(II) the denominator of which is 

24 the aggregate number of foreclosures 

25 in all foreclosure crisis States, plus 


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1 ‘‘(ii) an amount equal to 

2 $10,000,000,000 multiplied by a frac3 tion— 

4 ‘‘(I) the numerator of which is 

5 the number of single family residences 

6 in such State with mortgages that are 

7 more than 30 days past due, and 

8 ‘‘(II) the denominator of which is 

9 the aggregate number of single family 

10 residences in all foreclosure crisis 

11 States with mortgages that more than 

12 30 days past due. 

13 ‘‘(B) SET ASIDE.—Any amount of the 

14 State ceiling for any foreclosure crisis State 

15 which is attributable to an increase under this 

16 paragraph shall be allocated solely for one or 

17 more qualified housing issues (as defined in 

18 paragraph (5)). The State shall ensure that 

19 such issues (to the extent attributable to an in20 crease under this paragraph) are used to fi21 nance housing in the counties and municipali22 ties of the State which experience the highest 

23 number of foreclosures, or have the highest 

24 number of residences with mortgages that are 

25 more than 30 days past due, per capita. 


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1 ‘‘(C) FORECLOSURE CRISIS STATE.—For 

2 purposes of this paragraph, the term ‘fore3 closure crisis State’ means the 10 States deter4 mined by the Secretary as having been the most 

5 impacted by the foreclosure crisis. In making 

6 such determination the Secretary shall take into 

7 account the rate of foreclosures in the States, 

8 the rate of single family residences in the 

9 States with mortgages that are more than 30 

10 days past due, and such other factors as the 

11 Secretary determines appropriate.’’. 

12 (b) CARRYFORWARD OF UNUSED LIMITATIONS.— 

13 Paragraph (6) of section 146(f) of the Internal Revenue 

14 Code of 1986 is amended— 

15 (1) by striking ‘‘subsection (d)(5)’’ in the text 

16 preceding subparagraph (A) and inserting ‘‘para17 graph (5) or (6) of subsection (d)’’, and 

18 (2) by striking ‘‘INCREASED VOLUME CAP

19 UNDER SUBSECTION (D)(5)’’ in the heading thereof 

20 and inserting ‘‘TEMPORARY INCREASED VOLUME

21 CAP’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to bonds issued after the date of 

24 the enactment of this Act. 


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1 SEC. 202. EXTENSION OF TIME FOR USING INCREASED VOL2 UME CAP FOR HOUSING BONDS. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 146(f)(6) of the Internal Revenue Code of 1986 is amend5 ed by striking ‘‘2010’’ and inserting ‘‘2011’’. 

6 (b) REPORT.—Not later than December 31, 2010, 

7 the Secretary of the Treasury shall submit a written re8 port to Congress regarding whether or not, considering the 

9 stability of the housing markets, the liberalization of the 

10 tax-exempt housing bond rules included in sections 

11 146(d)(5), 146(d)(6), and 143(k)(12) of the Internal Rev12 enue Code of 1986 should be extended beyond December 

13 31, 2011. 

14 SEC. 203. EXPANSION OF USE OF MORTGAGE REVENUE 

15 BONDS FOR MORTGAGE REFINANCING 

16 LOANS. 

17 (a) IN GENERAL.—Subparagraph (C) of section 

18 143(k)(12) of the Internal Revenue Code of 1986 is 

19 amended by striking ‘‘adjustable rate’’. 

20 (b) EXTENSION OF PROGRAM.—Subparagraph (D) of 

21 section 143(k)(12) of such Code is amended by striking 

22 ‘‘December 31, 2010’’ and inserting ‘‘December 31, 

23 2011’’. 

24 (c) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to bonds issued after the date of 

26 the enactment of this Act. 


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1 SEC. 204. ALTERNATIVE MINIMUM TAX LIMITATIONS NOT 

2 APPLICABLE TO REFINANCINGS OF TAX-EX3 EMPT HOUSING BONDS. 

4 (a) IN GENERAL.—Clause (iii) of section 57(a)(5)(C) 

5 of the Internal Revenue Code of 1986 is amended by strik6 ing the last sentence thereof. 

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

8 this section shall apply to refunding bonds issued after the 

9 date of the enactment of this Act. 

10 SEC. 205. CLARIFICATION OF APPLICABILITY TO HIGH 

11 FORECLOSURE IMPACT AREAS. 

12 (a) IN GENERAL.—Subsection (j) of section 143 of 

13 the Internal Revenue Code of 1986 is amended— 

14 (1) in paragraph (1)— 

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

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

17 period at the end and inserting ‘‘, or’’, and 

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

19 subparagraph: 

20 ‘‘(C) a high foreclosure area.’’; and 

21 (2) by adding at the end the following new 

22 paragraph: 

23 ‘‘(4) HIGH FORECLOSURE AREA.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), the term ‘high foreclosure area’ 

26 means an area for which the rate of— 


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1 ‘‘(i) foreclosures on mortgages on resi2 dences occurring during the preceding 12 

3 months, and 

4 ‘‘(ii) notices provided to mortgagors 

5 during the preceding calendar quarter, 

6 specifying that payment of amounts due 

7 under a mortgage on a residence is at least 

8 30 days past due, 

9 exceeds 150 percent of the national rate. 

10 ‘‘(B) DATE USED.—The determination 

11 under subparagraph (A) shall be made on the 

12 basis of the best data available to a State on a 

13 quarterly basis.’’. 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to bonds issued after the date of 

16 the enactment of this Act. 

Æ 


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