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 Mort-
gage 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 Set-
tlement, 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 ‘‘Homeowner Tax Fair-
ness Act’’. 
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SEC. 2. EXTENSION OF INCOME EXCLUSION FOR DIS-
CHARGE OF QUALIFIED PRINCIPAL RESI-
DENCE INDEBTEDNESS. 
(a) IN GENERAL.—Subparagraph (E) of section 
108(a)(1) of the Internal Revenue Code of 1986 is amend-
ed by striking ‘‘January 1, 2014’’ and inserting ‘‘January 
1, 2017’’. 
(b) APPLICATION TO CERTAIN AGREEMENTS.—Sub-
paragraph (E) of section 108(a)(1) of such Code, as 
amended by subsection (a), is amended by inserting before 
the period the following: ‘‘, or which is discharged after 
such date pursuant to an agreement entered into before 
such date under the programs created pursuant to, or 
using funds authorized by the Emergency Economic Sta-
bilization Act of 2008’’. 
(c) EFFECTIVE DATE.— 
(1) SUBSECTION (a).—The amendment made 
by subsection (a) shall apply to discharges in taxable 
years beginning after December 31, 2013. 
(2) SUBSECTION (b).—The amendment made 
by subsection (b) shall take effect on the date of the 
enactment of this Act. 
SEC. 3. EXTENSION OF DEDUCTION FOR MORTGAGE INSUR-
ANCE PREMIUMS. 
(a) 
IN
GENERAL.—Subclause 
(I) 
of 
section 
163(h)(3)(E)(iv) of the Internal Revenue Code of 1986 
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is amended by striking ‘‘December 31, 2013’’ and insert-
ing ‘‘December 31, 2015’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to amounts paid or accrued after 
December 31, 2013. 
SEC. 4. EXCLUSIONS RELATING TO NATIONAL MORTGAGE 
SETTLEMENT PAYMENTS. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
items specifically excluded from gross income) is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139F. NATIONAL MORTGAGE SETTLEMENT. 
‘‘(a) GENERAL RULE.—In the case of an individual, 
gross income shall not include any National Mortgage Set-
tlement amount. 
‘‘(b) NATIONAL MORTGAGE SETTLEMENT AMOUNT 
DEFINED.—For purposes of subsection (a), the term ‘Na-
tional Mortgage Settlement amount’ means, with respect 
to any amount received under the National Mortgage Set-
tlement, an amount which is— 
‘‘(1) a payment for transitional assistance, 
‘‘(2) a payment from the Borrower Payment 
Fund under the National Mortgage Settlement to a 
borrower whose qualified principal residence was 
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sold or taken in foreclosure after December 31, 
2007, and before January 1, 2014, or 
‘‘(3) a payment received as a result of a fore-
closure or excess charge of interest that the United 
States Department of Justice has determined was 
not in compliance with the Servicemembers Civil Re-
lief Act. 
‘‘(c) DISREGARD OF REFUND OF EXCESS MORTGAGE 
INTEREST AND RELATED DAMAGES.—In the case of an 
individual, the amount of interest refunded and damages 
paid under the National Mortgage Settlement for excess 
charges of mortgage interest described in subsection 
(b)(3)— 
‘‘(1) shall be disregarded for purposes of this 
chapter, and 
‘‘(2) no adjustment of the deduction allowable 
under section 163(h) shall be made as a result of 
such refund. 
‘‘(d) NATIONAL MORTGAGE SETTLEMENT.—For pur-
poses of this section, the term ‘National Mortgage Settle-
ment’ means any consent agreement entered into in settle-
ment of the action entitled ‘The United States of America, 
et al. against Bank of America Corporation, et al.’, filed 
in the United States District Court for the District of Co-
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lumbia on March 12, 2012 (case numbered 1:12–cv– 
00361–RMC).’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for such part III is amended by inserting before the item 
relating to section 140 the following new item: 
‘‘Sec. 139F. National Mortgage Settlement.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid on or after Feb-
ruary 9, 2012, in taxable years ending after such date. 
SEC. 5. DENIAL OF BUSINESS DEDUCTION FOR NATIONAL 
MORTGAGE SETTLEMENT PAYMENTS. 
(a) IN GENERAL.—Section 162 of such Code is 
amended by redesignating subsection (q) as subsection (r) 
and by inserting after subsection (p) the following new 
subsection: 
‘‘(q) NATIONAL MORTGAGE SETTLEMENT.— 
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed under this chapter for any National Mortgage 
Settlement amount that was paid in exchange for a 
full release of the United States potential civil claims 
under the Servicemembers Civil Relief Act. 
‘‘(2) 
NATIONAL
MORTGAGE
SETTLEMENT 
AMOUNT.—The term ‘National Mortgage Settlement 
amount’ has the meaning given such term by section 
139F.’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid in taxable years 
ending after February 1, 2014. 
Æ 
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