‘‘(3) TREATMENT OF REFINANCINGS.—A refi-
nancing of a qualified mortgage shall be treated in 
the same manner as a modification to such mort-
gage. 
‘‘(d) TERMINATION.—Subsection (a) shall not apply 
to any qualified mortgage workout which becomes legally 
binding after June 30, 2010.’’. 
(2) CONFORMING AMENDMENT.—The table of 
sections for part III of subchapter B of chapter 1 
of such Code is amended by inserting after the item 
relating to section 139C the following new item: 
‘‘Sec. 139D. Mortgage modification income.’’. 
(b) EXCLUSION OF DEBT CANCELLED PURSUANT TO 
A QUALIFIED MORTGAGE WORKOUT.— 
(1) IN
GENERAL.—Paragraph (1) of section 
108(a) of such Code is amended by striking ‘‘or’’ at 
the end of the subparagraph (D), by striking the pe-
riod at the end of subparagraph (E) and inserting 
‘‘, or’’, and by adding at the end the following new 
subparagraph: 
‘‘(F) the indebtedness is a qualified mort-
gage (as defined in section 139D(c)(1)) and is 
discharged in connection with a qualified mort-
gage workout to which section 139D(a) ap-
plies.’’. 
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(2) BASIS REDUCTION.—Subsection (h) of sec-
tion 108 of such Code is amended— 
(A) by striking ‘‘subsection (a)(1)(E)’’ in 
paragraph (1) and inserting ‘‘subparagraph (E) 
or (F) of subsection (a)(1)’’, and 
(B) by striking ‘‘QUALIFIED’’ in the head-
ing of such subsection. 
(3) COORDINATION
OF
EXCLUSIONS.—Para-
graph (2) of section 108(a) of such Code is amend-
ed— 
(A) by striking ‘‘and (E)’’ in subparagraph 
(A) and inserting ‘‘(E), and (F)’’, and 
(B) by adding at the end the following new 
subparagraph: 
‘‘(D) MORTGAGE
WORKOUT
EXCLUSION 
TAKES PRECEDENCE UNLESS ELECTED OTHER-
WISE.—Subparagraphs (B) and (E) shall not 
apply to a discharge to which paragraph (1)(F) 
applies unless the taxpayer elects to have para-
graph (1)(F) not apply.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified mortgage workouts 
(within the meaning of section 139D of the Internal Rev-
enue Code of 1986, as added by this section) which be-
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come legally binding after the date of the enactment of 
this Act. 
SEC. 5. SERVICER SAFE HARBOR FOR MORTGAGE LOAN 
MODIFICATIONS. 
(a) SAFE HARBOR.— 
(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 that acts consistent with the duty 
set forth in section 129A(a) of Truth in Lending Act 
(15 U.S.C. 1639a) shall not be liable for entering 
into a loan modification, workout, or other loss miti-
gation plan, including, but not limited to, disposi-
tion, including any modification or refinancing un-
dertaken pursuant to standard loan modification, 
sale, or disposition guidelines issued by the Sec-
retary of the Treasury or his designee under the 
Emergency Economic Stabilization Act of 2008, with 
respect to any such mortgage that meets all of the 
criteria set forth in paragraph (2)(B) to— 
(A) any person, based on that person’s 
ownership of a residential mortgage loan or any 
interest in a pool of residential mortgage loans 
or in securities that distribute payments out of 
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the principal, interest and other payments in 
loans on the pool; 
(B) any person who is obligated pursuant 
to a derivatives instrument to make payments 
determined in reference to any loan or any in-
terest 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.— 
(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 
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loss mitigation plan for a residential mort-
gage or a class of residential 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. 
(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. 
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(3) 
APPLICABILITY.—This 
subsection 
shall 
apply only with respect to modifications, workouts, 
and other loss mitigation plans initiated before Jan-
uary 1, 2012. 
(b) REPORTING.—Each servicer that engages in loan 
modifications or workout plans subject to the safe harbor 
in subsection (a) shall report to the Secretary on a regular 
basis regarding the extent, scope and results of the 
servicer’s modification activities. The Secretary shall pre-
scribe regulations specifying the form, content, and timing 
of such reports. 
(c) LEGAL COSTS.—If an unsuccessful action is 
brought against a servicer by any person described in sub-
paragraph (A), (B), or (C) of subsection (a)(1), such per-
son shall bear any actual legal costs of the servicer, includ-
ing reasonable attorney fees and expert witness fees, in-
curred in good faith in such action, as determined by the 
court. 
(d) DEFINITIONS.—For purposes of this section, the 
following definitions shall apply: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(2) 
SECURITIZATION
VEHICLE.—The 
term 
‘‘securitization vehicle’’ means a trust, corporation, 
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partnership, limited liability entity, special purpose 
entity, or other structure that— 
(A) is the issuer, or is created by the 
issuer, of mortgage pass-through certificates, 
participation certificates, mortgage-backed secu-
rities, or other similar securities backed by a 
pool of assets that includes residential mortgage 
loans; and 
(B) holds such mortgages. 
SEC. 6. CREDIT FOR CERTAIN HOME PURCHASES. 
(a) ALLOWANCE OF CREDIT.—Subpart A of part IV 
of subchapter A of chapter 1 of the Internal Revenue Code 
of 1986, as amended by this Act, is amended by inserting 
after section 25E the following new section: 
‘‘SEC. 25F. CREDIT FOR CERTAIN HOME PURCHASES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual who makes an eligible purchase during the taxable 
year, there shall be allowed as a credit against the tax 
imposed by this subtitle for such taxable year an amount 
equal to so much of the purchase price of the residence 
as does not exceed $15,000. 
‘‘(b) DOWNPAYMENT
REQUIREMENT.—No credit 
shall be allowed under subsection (a) to any taxpayer with 
respect to the purchase of any residence unless such tax-
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payer makes a downpayment of not less 5 percent of the 
purchase price of such residence. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE PURCHASE.—The term ‘eligible 
purchase’ means the purchase of a residence for the 
taxpayer if— 
‘‘(A) such residence is located in the 
United States, 
‘‘(B) the construction of such residence 
began before 2009, and 
‘‘(C) such purchase is made by the tax-
payer before July 1, 2010. 
‘‘(2) OTHER
DEFINITIONS.—The terms ‘pur-
chase’ and ‘purchase price’ have the respective 
meanings given such terms by section 26(c). 
‘‘(d) EXCEPTIONS.—No credit shall be allowed under 
subsection (a) to any taxpayer for any taxable year with 
respect to the purchase of a residence if— 
‘‘(1) credit under section 36 (relating to first- 
time homebuyer credit) or 1400C (relating to first- 
time homebuyer in the District of Columbia) is al-
lowed to the taxpayer (or the taxpayer’s spouse) for 
such taxable year or any prior taxable year, 
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‘‘(2) the residence is financed by the proceeds 
of a qualified mortgage issue the interest on which 
is exempt from tax under section 103, 
‘‘(3) the taxpayer is a nonresident alien indi-
vidual, or 
‘‘(4) the taxpayer disposes of such residence (or 
such residence ceases to be a residence of the tax-
payer (or, if married, the taxpayer’s spouse)) before 
the close of such taxable year. 
‘‘(e) LIMITATION BASED ON AMOUNT OF TAX.—In 
the case of a taxable year to which section 26(a)(2) does 
not apply, the credit allowed under subsection (a) for any 
taxable year shall not exceed the excess of— 
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under this 
subpart (other than this section and section 25D) 
for the taxable year. 
‘‘(f) CARRYFORWARDS OF UNUSED CREDIT.— 
‘‘(1) RULE
FOR
YEARS
IN
WHICH
ALL
PER-
SONAL CREDITS ALLOWED AGAINST REGULAR AND 
ALTERNATIVE MINIMUM TAX.—In the case of a tax-
able year to which section 26(a)(2) applies, if the 
credit allowable under subsection (a) for any taxable 
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year exceeds the limitation imposed by section 
26(a)(2) for such taxable year reduced by the sum 
of the credits allowable under this subpart (other 
than this section and sections 25D and 1400C), 
such excess shall be carried to the succeeding tax-
able year and added to the credit allowable under 
subsection (a) for such taxable year. 
‘‘(2) RULE FOR OTHER YEARS.—In the case of 
a taxable year to which section 26(a)(2) does not 
apply, if the credit allowable under subsection (a) for 
any taxable year exceeds the limitation imposed by 
subsection (e) for such taxable year, such excess 
shall be carried to the succeeding taxable year and 
added to the credit allowable under subsection (a) 
for such taxable year. 
‘‘(3) LIMITATION.—No credit may be carried 
forward under this subsection to any taxable year 
following the third taxable year after the taxable 
year in which the credit arose. For purposes of the 
preceding sentence, credits shall be treated as used 
on a first-in first-out basis. 
‘‘(g) OTHER RULES TO APPLY.— 
‘‘(1) RELATED PERSONS.—Rules similar to the 
rules of section 26(c)(5) shall apply for purposes of 
this section. 
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‘‘(2) MARRIED INDIVIDUALS FILING SEPARATE 
RETURNS, ETC.—Rules similar to the rules of sub-
paragraphs (B) and (C) of section 26(b)(1) shall 
apply for purposes of this section. 
‘‘(3) REPORTING.—Rules similar to the rules of 
section 26(e) shall apply for purposes of this section. 
‘‘(h) RECAPTURE OF CREDIT.—Rules similar to the 
rules of section 26(f) shall apply for purposes of this sec-
tion, except that— 
‘‘(1) paragraph (1) thereof shall be applied by 
substituting ‘331⁄3 percent’ for ‘62⁄3 percent’, and 
‘‘(2) paragraph (7) thereof shall be applied by 
substituting ‘3 years’ for ‘15 years’.’’. 
(b) CONFORMING AMENDMENTS.— 
(1)(A) Section 23(b)(4)(B) of such Code is 
amended by striking ‘‘section 25D’’ inserting ‘‘sec-
tions 25D and 25F’’. 
(B) Section 24(b)(3)(B) of such Code is amend-
ed by inserting ‘‘25F,’’ after ‘‘25D,’’. 
(C) Section 25(e)(1)(C)(ii) of such Code is 
amended by inserting ‘‘25F,’’ after ‘‘25D,’’. 
(D) Section 25B(g)(2) of such Code is amended 
by inserting ‘‘25F,’’ after ‘‘25D,’’. 
(E) Section 26(a)(1) of such Code is amended 
by inserting ‘‘25F,’’ after ‘‘25D,’’. 
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(F) Section 30(c)(2)(B)(ii) of such Code is 
amended by inserting ‘‘25F,’’ after ‘‘25D,’’. 
(G) Section 30B(g)(2)(B)(ii) of such Code is 
amended by inserting ‘‘25F,’’ after ‘‘25D,’’. 
(H) Section 30D(c)(2)(B)(ii) of such Code is 
amended by striking ‘‘and 25D’’ and inserting ‘‘, 
25D, and 25F’’. 
(I) Section 904(i) of such Code is amended by 
inserting ‘‘25F,’’ after ‘‘25B,’’. 
(2) Paragraph (1) of section 23(c) of such Code 
is amended by inserting ‘‘, 25F,’’ after ‘‘25D,’’. 
(3) The table of sections for subpart A of part 
IV of subchapter A of chapter 1 of such Code, as 
amended by this Act, is amended by inserting after 
the item relating to section 25E the following new 
item: 
‘‘Sec. 25F. Credit for certain home purchases.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to residences purchased after the 
date of the enactment of this Act, in taxable years ending 
after such date. 
SEC. 7. CERTAIN GAINS ON SINGLE-FAMILY RESIDENTIAL 
RENTAL PROPERTY EXCLUDED FROM GROSS 
INCOME. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986, as amended 
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by this Act, is amended by inserting after section 139D 
the following new section: 
‘‘SEC. 139E. CERTAIN GAINS ON SINGLE-FAMILY RESIDEN-
TIAL RENTAL PROPERTY. 
‘‘(a) IN GENERAL.—Gross income shall not include 
any gain from the sale or exchange of a qualified single- 
family residential rental property. 
‘‘(b) LIMITATION.—The amount of gain excluded 
from gross income under subsection (a) with respect to 
any sale or exchange shall not exceed $250,000. 
‘‘(c) 
QUALIFIED
SINGLE-FAMILY
RESIDENTIAL 
RENTAL PROPERTY.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified prop-
erty’ means any real property located in the United 
States which— 
‘‘(A) was acquired by the taxpayer by pur-
chase (as defined in section 179(d)(2)) during 
the period beginning on the date of the enact-
ment of this section and ending on June 30, 
2010, 
‘‘(B) was held by the taxpayer for 2 years 
or more, and 
‘‘(C) was rented as a single dwelling unit 
on a regular basis during 2 of the taxable years 
in the 5 taxable year period ending with the 
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taxable year in which the property was sold or 
exchanged. 
‘‘(2) REGULAR BASIS.—For purposes of para-
graph (1)(C), property shall not be treated as rented 
on a regular basis during any taxable year unless— 
‘‘(A) such property is rented on the basis 
of months or longer periods, and 
‘‘(B) such property is rented for not less 
than 6 months of such year. 
‘‘(d) EXCEPTION FOR NONRESIDENT ALIEN INDIVID-
UALS.—No credit shall be allowed under subsection (a) to 
any taxpayer if such taxpayer is a nonresident alien indi-
vidual.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code, 
as amended by this Act, is amended by inserting after the 
item relating to section 139D the following new item: 
‘‘Sec. 139E. Certain gains on single-family residential rental property.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property acquired after the date 
of the enactment of this Act. 
Æ 
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