The rules of clauses (ii)(II) and (iv) shall 
not apply for purposes designations made 
under this clause.’’. 
(3) CONFORMING AMENDMENT.—The heading 
of subparagraph (C) of section 42(d)(5) of such 
Code is amended by striking ‘‘BUILDINGS IN HIGH 
COST AREAS’’ and inserting ‘‘CERTAIN BUILDINGS’’. 
(d) MODIFICATION OF SCATTERED SITE RULE.— 
Paragraph (7) of section 42(g) of the Internal Revenue 
Code of 1986 (relating to scattered site projects) is 
amended to read as follows: 
‘‘(7) SCATTERED
SITE
PROJECTS.—Buildings 
which would (but for their lack of proximity) be 
treated as a project for purposes of this section shall 
be so treated if the rent-restricted (within the mean-
ing of paragraph (2)) residential units of such 
project are distributed among such buildings in pro-
portion to the number of residential units in each 
building.’’. 
(e) AFFORDABLE HOUSING CREDITS ALLOWED FOR 
SECTION
8 MODERATE
REHABILITATION
DEVELOP-
MENTS.—Paragraph (2) of section 42(c) of the Internal 
Revenue Code of 1986 (relating to qualified low-income 
building) is amended by striking the last sentence. 
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(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to— 
(1) housing credit dollar amounts allocated 
after December 31, 2006, and 
(2) buildings placed in service after such date 
to the extent paragraph (1) of section 42(h) of the 
Internal Revenue Code of 1986 does not apply to 
such building by reason of paragraph (4) thereof, 
but only with respect to bonds issued after such 
date. 
SEC. 2. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL 
REPAYMENTS 
ON 
QUALIFIED 
MORTGAGE 
ISSUES TO REDEEM BONDS. 
(a) IN GENERAL.—Subparagraph (A) of section 
142(a)(2) of the Internal Revenue Code of 1986 (relating 
to qualified mortgage issue defined) is amended by insert-
ing ‘‘and’’ at the end of clause (ii), by striking ‘‘, and’’ 
at the end of clause (iii) and inserting a period, and by 
striking clause (iv) and the last sentence. 
(b) CONFORMING AMENDMENT.—Clause (ii) of sec-
tion 142(a)(2)(D) of such Code is amended by striking 
‘‘(and clause (iv) of subparagraph (A))’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to repayments received after the 
date of the enactment of this Act. 
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SEC. 3. COORDINATION OF CERTAIN RULES APPLICABLE 
TO 
AFFORDABLE 
HOUSING 
CREDIT 
AND 
QUALIFIED RESIDENTIAL RENTAL PROJECT 
EXEMPT FACILITY BONDS. 
(a) DETERMINATION OF NEXT AVAILABLE UNIT.— 
Paragraph (3) of section 142(d) of the Internal Revenue 
Code of 1986 (relating to current income determinations) 
is amended by adding at the end the following new sub-
paragraph: 
‘‘(C) EXCEPTION FOR PROJECTS WITH RE-
SPECT TO WHICH AFFORDABLE HOUSING CRED-
IT IS ALLOWED.—In the case of a project with 
respect to which credit is allowed under section 
42, the second sentence of subparagraph (B) 
shall be applied by substituting ‘building (with-
in the meaning of section 42)’ for ‘project’.’’. 
(b) STUDENTS.—Paragraph (2) of section 142(d) of 
the Internal Revenue Code of 1986 (relating to definitions 
and special rules) is amended by adding at the end the 
following new subparagraph: 
‘‘(C) STUDENTS.—Students (as defined in 
section 151(c)(4)) shall not be treated as satis-
fying the requirements of subparagraph (A) or 
(B) of paragraph (1) except under rules similar 
to the rules of 42(i)(3)(D).’’. 
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(c) SINGLE-ROOM OCCUPANCY UNITS.—Paragraph 
(2) of section 142(d) of the Internal Revenue Code of 
1986 (relating to definitions and special rules), as amend-
ed by this Act, is further amended by adding at the end 
the following new subparagraph: 
‘‘(D) SINGLE-ROOM OCCUPANCY UNITS.—A 
unit shall not fail to be treated as a residential 
unit merely because such unit is a single-room 
occupancy unit (within the meaning of section 
42).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to determinations of the status of 
qualified residential rental projects for periods beginning 
after the date of the enactment of this Act, with respect 
to bonds issued before, on, or after such date. 
SEC. 4. DISPLACED HOMEMAKERS, SINGLE PARENTS, AND 
CERTAIN DISASTER VICTIMS TREATED AS 
FIRST-TIME HOME BUYERS UNDER RULES 
FOR MORTGAGE REVENUE BONDS. 
(a) IN GENERAL.—Paragraph (2) of section 143(d) 
of the Internal Revenue Code of 1986 (relating to excep-
tions) is amended by striking ‘‘and’’ at the end of subpara-
graph (B), and by inserting after subparagraph (C) the 
following new subparagraphs: 
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‘‘(D) financing provided to a displaced 
homemaker or a single parent, and 
‘‘(E) financing provided for the acquisition 
of a residence located in an area determined by 
the President to warrant assistance from the 
Federal Government under the Robert T. Staf-
ford Disaster Relief and Emergency Assistance 
Act by an individual whose prior primary resi-
dence was in such area and was destroyed or 
otherwise rendered uninhabitable as a result of 
such disaster,’’. 
(b) DISPLACED HOMEMAKER; SINGLE PARENT.— 
Subsection (d) of section 143 of such Code (relating to 
3-year requirement) is amended by adding at the end the 
following new paragraph: 
‘‘(4) DISPLACED
HOMEMAKER; SINGLE
PAR-
ENT.—For purposes of paragraph (2)(D)— 
‘‘(A) DISPLACED HOMEMAKER.—The term 
‘displaced homemaker’ means an individual 
who— 
‘‘(i) is an adult, 
‘‘(ii) has not worked full-time full-year 
in the labor force for a number of years 
but has, during such years, worked pri-
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