I 
111TH CONGRESS 
2D SESSION 
H. R. 6317 
To amend Federal law, including the Internal Revenue Code of 1986, to 
reform and encourage investment in commercial real estate, and for 
other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 29, 2010 
Mr. BRADY of Texas 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 amend Federal law, including the Internal Revenue Code 
of 1986, to reform and encourage investment in commer-
cial real estate, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Investment in Com-
mercial Real Estate Act of 2010’’. 
SEC. 2. SERVICER SAFE HARBOR. 
(a) SAFE HARBOR.— 
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(1) LOAN
MODIFICATIONS
AND
WORKOUT 
PLANS.—Notwithstanding any other provision of 
law, and notwithstanding any investment contract 
between a servicer and a securitization vehicle or in-
vestor, a servicer shall not be liable for entering into 
a loan modification or workout plan with respect to 
any commercial mortgage loan that meets all of the 
criteria set forth in paragraph (2)(B) to— 
(A) any person, based on that person’s 
ownership of a commercial mortgage loan or 
any interest in a pool of commercial mortgage 
loans or in securities that distribute payments 
out of the principal, interest and other pay-
ments in loans on the pool; 
(B) any person who is obligated to make 
payments determined in reference to any loan 
or any interest referred to in subparagraph (A); 
or 
(C) any person that insures any loan or 
any interest referred to in subparagraph (A) 
under any law or regulation of the United 
States or any law or regulation of any State or 
political subdivision of any State. 
(2) ABILITY TO MODIFY MORTGAGES.— 
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(A) ABILITY.—Notwithstanding any other 
provision of law, and notwithstanding any in-
vestment contract between a servicer and a 
securitization vehicle or investor, a servicer— 
(i) shall not be limited in the ability 
to modify mortgages, the number of mort-
gages that can be modified, the frequency 
of loan modifications, or the range of per-
missible modifications; and 
(ii) shall not be obligated to repur-
chase loans from or otherwise make pay-
ments to the securitization vehicle on ac-
count of a modification, workout, or other 
loss mitigation plan for a commercial mort-
gage or a class of commercial mortgages 
that constitute a part or all of the mort-
gages in the securitization vehicle, 
if any mortgage so modified meets all of the cri-
teria set forth in subparagraph (B). 
(B) CRITERIA.—The criteria under this 
subparagraph with respect to a mortgage are as 
follows: 
(i) Default on the payment of such 
mortgage has occurred or is reasonably 
foreseeable. 
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(ii) The property securing such mort-
gage is occupied by the mortgagor of such 
mortgage. 
(iii) The servicer reasonably and in 
good faith believes that the anticipated re-
covery on the principal outstanding obliga-
tion of the mortgage under the particular 
modification or workout plan or other loss 
mitigation action will exceed, on a net 
present value basis, the anticipated recov-
ery on the principal outstanding obligation 
of the mortgage to be realized through 
foreclosure. 
(3) 
APPLICABILITY.—This 
subsection 
shall 
apply only with respect to modifications, workouts, 
and other loss mitigation plans initiated before Jan-
uary 1, 2012. 
(b) DEFINITION OF SECURITIZATION VEHICLES.— 
For purposes of this section, the term ‘‘securitization vehi-
cle’’ means a trust, corporation, partnership, limited liabil-
ity entity, special purpose entity, or other structure that— 
(1) is the issuer, or is created by the issuer, of 
mortgage pass-through certificates, participation cer-
tificates, mortgage-backed securities, or other similar 
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securities backed by a pool of assets that includes 
commercial mortgage loans; and 
(2) holds such mortgages. 
SEC. 3. RECOVERY PERIOD FOR RESIDENTIAL RENTAL 
PROPERTY 
AND 
NONRESIDENTIAL 
REAL 
PROPERTY. 
(a) IN GENERAL.—The table in subsection (c) of sec-
tion 168 of the Internal Revenue Code of 1986 (specifying 
applicable recovery period) is amended— 
(1) by striking ‘‘27.5 years’’ and inserting ‘‘20 
years’’, and 
(2) by striking ‘‘39 years’’ and inserting ‘‘20 
years’’. 
(b) DEPRECIATION RULES FOR RESIDENTIAL RENT-
AL PROPERTY AND NON-RESIDENTIAL REAL PROPERTY 
FOR PURPOSES OF EARNINGS AND PROFITS.—Paragraph 
(3) of section 312(k) of the Internal Revenue Code of 
1986 (relating to exception for tangible property) is 
amended by adding at the end the following new subpara-
graph: 
‘‘(C) TREATMENT OF RESIDENTIAL RENT-
AL
PROPERTY
AND
NONRESIDENTIAL
REAL 
PROPERTY.—In the case of any residential rent-
al property or nonresidential real property 
(within the meaning of section 168(c)), the ad-
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justment to earnings and profits for deprecia-
tion for any taxable year shall be determined 
under the alternative depreciation method 
(within the meaning of section 168(g)(2)), ex-
cept that the recovery period shall be 20 
years.’’. 
(c) CONFORMING AMENDMENT.—Subparagraph (A) 
of section 312(k)(3) of the Internal Revenue Code of 1986 
is amended by striking ‘‘subparagraph (B),’’ and inserting 
‘‘subparagraphs (B) and (C),’’. 
(d) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to property placed in service on 
or after the date of the enactment of this Act. 
SEC. 4. NET OPERATING LOSS CARRYBACK INCREASED TO 
5 YEARS. 
(a) IN GENERAL.—Clause (i) of section 172(b)(1)(A) 
of the Internal Revenue Code of 1986 (relating to years 
to which loss may be carried) is amended by striking ‘‘2 
years’’ and inserting ‘‘5 years’’. 
(b) ALTERNATIVE MINIMUM TAX.—Subclause (II) of 
section 56(d)(1)(A)(i) of such Code is amended by striking 
‘‘90 percent of’’. 
(c) CONFORMING AMENDMENTS.— 
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(1) Section 172(b)(1) of such Code is amended 
by striking subparagraphs (F), (G), (H), (I), and 
(J). 
(2) Section 56(d)(1)(A) of such Code is amend-
ed— 
(A) in clause (i)(I) thereof by striking 
‘‘(other than the deduction described in clause 
(ii)(I))’’, and 
(B) by amending clause (ii) to read as fol-
lows: 
‘‘(ii) alternative minimum taxable in-
come determined without regard to such 
deduction and the deduction under section 
199 reduced by the amount determined 
under clause (i),’’. 
(3) Section 56(d) of such Code is amended by 
striking paragraph (3). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 5. DYNAMIC PROVISIONING OF INVESTMENT AND 
LOAN LOSS RESERVES. 
(a) IMPLEMENTATION REQUIREMENT.—The Federal 
banking agencies shall implement a system of dynamic 
provisioning for investment and loan loss reserves (here-
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after in this section referred to as the ‘‘dynamic reserve 
system’’) that meets the requirements of this section and 
is applicable to all depository institutions before January 
1, 2011. 
(b) TOTAL PROVISIONING.—For each depository in-
stitution during any accounting period, the total provision 
for investment and loan loss reserves shall equal the sum 
of— 
(1) the general provision for investment and 
loan loss reserves, as determined under subsection 
(c); and 
(2) the specific provision for investment and 
loan loss reserves, as determined under subsection 
(d). 
(c) GENERAL PROVISION.— 
(1) CATEGORIES.—The Board of Governors of 
the Federal Reserve System shall establish major 
categories of loans and investment to be used by de-
pository institutions for purposes of the dynamic re-
serve system. 
(2) PUBLICATION
OF
AVERAGE
HISTORICAL 
SPECIFIC LOSSES AND WRITE-DOWNS.— 
(A) IN
GENERAL.—For each major cat-
egory established pursuant to paragraph (1), 
the Board shall calculate and publish the aver-
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age historical specific losses and write-downs as 
a percentage of total loans and investments 
over a period determined by the Board. 
(B) LIMITS ON PERIOD.—The period de-
termined by the Board under subparagraph (A) 
may not be less than 10 years and shall include 
at least 1 full business cycle. 
(3) MINIMUM PERCENTAGE.—For each major 
category established pursuant to paragraph (1), the 
Board shall establish a minimum percentage that 
shall be the larger of— 
(A) the average historical specific losses 
and write-downs, in such category, as a percent-
age of total loans and investments, in such cat-
egory, of all United States depository institu-
tions over the period determined by the Board; 
or 
(B) a percentage determined by the Board. 
(4) PROVISION.— 
(A) IN GENERAL.—During each accounting 
period, each depository institution shall make a 
general provision to the investment and loan 
loss reserves of the institution for each major 
category established pursuant to paragraph (1). 
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(B) MEASURE OF PROVISION.—The gen-
eral provision to the investment and loan loss 
reserves of a depository institution under sub-
paragraph (A) for each major category shall 
consist of the sum of— 
(i) the product of— 
(I) the total amount of the loans 
and investment in such category in 
such depository institution at the be-
ginning of the accounting period; and 
(II) the average historical specific 
credit losses and write-downs in such 
category as a percentage of total loans 
and investments in such category of 
all depository institutions over the pe-
riod determined by the Board minus 
the amount of any specific provisions 
made by such depository institution 
during such accounting period with 
respect to such category; and 
(ii) the product of— 
(I) the difference between the 
total amount of the loans and invest-
ment in such category in such deposi-
tory institution at the end of the ac-
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counting period and the total amount 
of the loans and investment in such 
category in such depository institution 
at the beginning of the accounting pe-
riod; and 
(II) the minimum percentage de-
termined by the Board under para-
graph (3) for such category. 
(d) SPECIFIC
PROVISIONS
FOR
GENERAL
CAT-
EGORIES OF INVESTMENTS AND LOANS.— 
(1) ESTABLISHMENT
OF
CATEGORIES.—The 
Board shall establish the general categories of in-
vestments and loans for all depository institutions. 
(2) CALCULATION
OF
HISTORICAL
SPECIFIC 
PROVISIONS
AND
AVERAGE
AMONG
OF
CREDIT 
LOSSES.—The Board shall calculate, publish and 
make available to the public— 
(A) the average historical specific provi-
sions for each category of investment and loans 
in all depository institutions over a period of 
such number of years as the Board may deter-
mine to be appropriate, subject to paragraph 
(3); and 
(B) the average historical amount of credit 
losses and write-downs for each major category 
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of investment and loans in all depository insti-
tutions over a period of such number of years 
as the Board may determine to be appropriate, 
subject to paragraph (3). 
(3) PERIOD OF YEARS SHALL ENCOMPASS BUSI-
NESS CYCLE.—The period of years determined under 
subparagraphs (A) and (B) of paragraph (2) shall 
be of such duration as to at least comprise a com-
plete business cycle. 
(e) OTHER REQUIREMENTS AND AUTHORITY.—The 
Board may establish a cap on the accumulation of general 
provision for investment and loan losses at any depository 
institution expressed as percent of total investment and 
loans at such depository institution. 
(f) BASEL ACCORD SUPERSEDES THIS SECTION.— 
If the Basel Committee on Banking Supervision agrees 
upon an alternative method for dynamic provisioning be-
fore December 31, 2010, the Board may implement such 
an agreement in lieu of implementing the requirements of 
subsections (c) and (d). 
(g) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) BOARD.—The term ‘‘Board’’ means the 
Board of Governors of the Federal Reserve System. 
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