I 

110TH CONGRESS 

2D SESSION H. R. 5239 

To amend the Internal Revenue Code of 1986 to provide that the proceeds 

of qualified mortgage bonds may be used to provide refinancing for 

subprime loans, to provide a temporary increase in the volume cap 

for qualified mortgage bonds used to provide that refinancing, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 6, 2008 

Mr. PORTER (for himself and Ms. SCHWARTZ) introduced the following bill; 

which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

that the proceeds of qualified mortgage bonds may be 

used to provide refinancing for subprime loans, to provide a temporary increase in the volume cap for qualified 

mortgage bonds used to provide that refinancing, 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, 


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1 SECTION 1. MODIFICATIONS AND INCREASED VOLUME CAP 

2 WITH RESPECT TO QUALIFIED MORTGAGE 

3 BONDS USED TO REFINANCE SUBPRIME 

4 LOANS. 

5 (a) USE OF QUALIFIED MORTGAGE BONDS PRO6 CEEDS FOR SUBPRIME REFINANCING LOANS.—Section 

7 143(k) of the Internal Revenue Code of 1986 (relating to 

8 other definitions and special rules) is amended by adding 

9 at the end the following new paragraph: 

10 ‘‘(12) SPECIAL RULES FOR SUBPRIME

11 REFINANCINGS.— 

12 ‘‘(A) IN GENERAL.—In the case of a resi13 dence which was originally financed by the 

14 mortgagor through a qualified subprime loan, 

15 this section shall be applied with the following 

16 modifications: 

17 ‘‘(i) Subsection (i)(1) (relating to 

18 mortgages must be new mortgages) shall 

19 not apply. 

20 ‘‘(ii) Subsection (a)(2)(D)(i) shall be 

21 applied by substituting ‘12-month period’ 

22 for ‘42-month period’ each place it ap23 pears. 

24 ‘‘(iii) Subsection (d) (relating to 3- 

25 year requirement) shall not apply. 


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1 ‘‘(iv) Subsection (e) (relating to pur2 chase price requirement) shall be applied 

3 by using the market value of the residence 

4 at the time of refinancing in lieu of the ac5 quisition cost. 

6 ‘‘(B) QUALIFIED SUBPRIME LOAN.—The 

7 term ‘qualified subprime loan’ means an adjust8 able rate single-family residential mortgage loan 

9 originated after December 31, 2001, and before 

10 January 1, 2008, that the bond issuer deter11 mines would likely cause financial hardship to 

12 the borrower if not refinanced. 

13 ‘‘(C) TERMINATION.—This paragraph shall 

14 not apply to any bonds issued after December 

15 31, 2010.’’. 

16 (b) INCREASE IN VOLUME CAP FOR QUALIFIED

17 MORTGAGE BONDS USED TO REFINANCE SUBPRIME

18 LOANS.— 

19 (1) IN GENERAL.—Subsection (d) of section 

20 146 of the Internal Revenue Code of 1986 is amend21 ed by adding at the end the following new para22 graph: 

23 ‘‘(5) INCREASE FOR 2008AND SET ASIDE FOR

24 QUALIFIED MORTGAGE BONDS USED TO REFINANCE

25 QUALIFIED SUBPRIME LOANS.— 


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1 ‘‘(A) IN GENERAL.—The State ceiling for 

2 each State for calendar year 2008 (determined 

3 without regard to this paragraph) shall be in4 creased by an amount which bears the same 

5 ratio to $15,000,000,000 as— 

6 ‘‘(i) the State ceiling for such State 

7 for such year (as so determined) bears to 

8 ‘‘(ii) the aggregate of the State ceil9 ings for all States (as so determined) for 

10 such year. 

11 ‘‘(B) SET ASIDE.— 

12 ‘‘(i) IN GENERAL.—Not less than an 

13 amount equal to each State’s increase in 

14 the State ceiling under subparagraph (A) 

15 shall be allocated solely for the purpose of 

16 qualified mortgage issues which meets the 

17 requirement of clause (ii). 

18 ‘‘(ii) REQUIREMENT.—A qualified 

19 mortgage issue meets the requirement of 

20 this clause if all the financing provided by 

21 the issue is used to refinance qualified 

22 subprime loans (as defined in section 

23 143(k)(12)(B)) to which section 

24 143(k)(12) applies.’’. 


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1 (2) CARRYFORWARD OF UNUSED LIMITA2 TIONS.—Subsection (f) of section 146 of such Code 

3 is amended by adding at the end the following new 

4 paragraph: 

5 ‘‘(6) SPECIAL RULES FOR INCREASED VOLUME

6 CAP UNDER SUBSECTION (D)(5).— 

7 ‘‘(A) IN GENERAL.—No amount which is 

8 attributable to the increase under subsection 

9 (d)(5) may be used— 

10 ‘‘(i) for a carryforward purpose other 

11 than issuing qualified mortgage bonds 

12 which meet the requirement of subsection 

13 (d)(5)(B)(ii), and 

14 ‘‘(ii) to issue any bond after Decem15 ber 31, 2010. 

16 ‘‘(B) ORDERING RULES.—For purposes of 

17 subparagraph (A), any carryforward of an 

18 issuing authority’s volume cap for calendar year 

19 2008 shall be treated as attributable to such in20 crease to the extent of such increase.’’. 

21 (c) ALTERNATIVE MINIMUM TAX.— 

22 (1) IN GENERAL.—Clause (ii) of section 

23 57(a)(5)(C) of the Internal Revenue Code of 1986 is 

24 amended by striking ‘‘shall not include’’ and all that 

25 follows and inserting ‘‘shall not include— 


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1 ‘‘(I) any qualified 501(c)(3) bond 

2 (as defined in section 145), or 

3 ‘‘(II) any qualified mortgage 

4 bond (as defined in section 143(a)) or 

5 qualified veterans’ mortgage bond (as 

6 defined in section 143(b)) issued after 

7 December 31, 2007, and before Janu8 ary 1, 2011.’’. 

9 (2) CONFORMING AMENDMENT.—The heading 

10 for section 57(a)(5)(C)(ii) of such Code is amended 

11 by striking ‘‘QUALIFIED 501(C)(3) BONDS’’ and insert12 ing ‘‘CERTAIN BONDS’’. 

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

14 this section shall apply to bonds issued after December 

15 31, 2007. 

Æ 


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