I 

113TH CONGRESS 

2D SESSION H. R. 4062 

To amend the Internal Revenue Code of 1986 to extend the income exclusion 

for discharge of qualified principal residence indebtedness, to provide 

exclusions from income for certain payments under the National Mortgage Settlement, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 14, 2014 

Mr. MCDERMOTT 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 extend 

the income exclusion for discharge of qualified principal 

residence indebtedness, to provide exclusions from income 

for certain payments under 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 ‘‘Homeowner Tax Fair5 ness Act’’. 


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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, 2014’’ and inserting ‘‘January 

7 1, 2017’’. 

8 (b) APPLICATION TO CERTAIN AGREEMENTS.—Sub9 paragraph (E) of section 108(a)(1) of such Code, as 

10 amended by subsection (a), is amended by inserting before 

11 the period the following: ‘‘, or which is discharged after 

12 such date pursuant to an agreement entered into before 

13 such date under the programs created pursuant to, or 

14 using funds authorized by the Emergency Economic Sta15 bilization 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, 2013. 

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)(iv) of the Internal Revenue Code of 1986 


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1 is amended by striking ‘‘December 31, 2013’’ and insert2 ing ‘‘December 31, 2015’’. 

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

4 this section shall apply to amounts paid or accrued after 

5 December 31, 2013. 

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 (relating to 

10 items specifically excluded from gross income) is amended 

11 by inserting before section 140 the following new section: 

12 ‘‘SEC. 139F. NATIONAL MORTGAGE SETTLEMENT. 

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

14 gross income shall not include any National Mortgage Set15 tlement amount. 

16 ‘‘(b) NATIONAL MORTGAGE SETTLEMENT AMOUNT

17 DEFINED.—For purposes of subsection (a), the term ‘Na18 tional Mortgage Settlement amount’ means, with respect 

19 to any amount received under the National Mortgage Set20 tlement, an amount which is— 

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

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

23 Fund under the National Mortgage Settlement to a 

24 borrower whose qualified principal residence was 


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1 sold or taken in foreclosure after December 31, 

2 2007, and before January 1, 2014, or 

3 ‘‘(3) a payment received as a result of a fore4 closure or excess charge of interest that the United 

5 States Department of Justice has determined was 

6 not in compliance with the Servicemembers Civil Re7 lief Act. 

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

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

10 individual, the amount of interest refunded and damages 

11 paid under the National Mortgage Settlement for excess 

12 charges of mortgage interest described in subsection 

13 (b)(3)— 

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

15 chapter, and 

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

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

18 such refund. 

19 ‘‘(d) NATIONAL MORTGAGE SETTLEMENT.—For pur20 poses of this section, the term ‘National Mortgage Settle21 ment’ means any consent agreement entered into in settle22 ment of the action entitled ‘The United States of America, 

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

24 in the United States District Court for the District of CoVerDate Mar 15 2010 23:33 Feb 18, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4062.IH H4062

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1 lumbia on March 12, 2012 (case numbered 1:12–cv– 

2 00361–RMC).’’. 

3 (b) CLERICAL AMENDMENT.—The table of sections 

4 for such part III is amended by inserting before the item 

5 relating to section 140 the following new item: 

‘‘Sec. 139F. National Mortgage Settlement.’’. 

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

7 this section shall apply to amounts paid on or after Feb8 ruary 9, 2012, in taxable years ending after such date. 

9 SEC. 5. DENIAL OF BUSINESS DEDUCTION FOR NATIONAL 

10 MORTGAGE SETTLEMENT PAYMENTS. 

11 (a) IN GENERAL.—Section 162 of such Code is 

12 amended by redesignating subsection (q) as subsection (r) 

13 and by inserting after subsection (p) the following new 

14 subsection: 

15 ‘‘(q) NATIONAL MORTGAGE SETTLEMENT.— 

16 ‘‘(1) IN GENERAL.—No deduction shall be al17 lowed under this chapter for any National Mortgage 

18 Settlement amount that was paid in exchange for a 

19 full release of the United States potential civil claims 

20 under the Servicemembers Civil Relief Act. 

21 ‘‘(2) NATIONAL MORTGAGE SETTLEMENT

22 AMOUNT.—The term ‘National Mortgage Settlement 

23 amount’ has the meaning given such term by section 

24 139F.’’. 


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

2 this section shall apply to amounts paid in taxable years 

3 ending after February 1, 2014. 

Æ 


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