I 
111TH CONGRESS 
1ST SESSION 
H. R. 906 
To provide incentives for affordable housing. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 4, 2009 
Mrs. TAUSCHER (for herself, Mr. CARDOZA, Ms. ZOE LOFGREN of California, 
Ms. BERKLEY, and Mr. HINCHEY) 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 de-
termined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To provide incentives for affordable housing. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Housing Disaster Area Foreclosure Prevention Act of 
2009’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title and table of contents. 
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TITLE I—EXPANSION OF STATE FORECLOSURE MITIGATION 
PROGRAMS 
Sec. 101. Stabilization of the mortgage revenue bond market. 
Sec. 102. TARP assistance for refinancing underwater mortgages. 
Sec. 103. Interest rate buy-down for refinancing mortgages and new mortgages 
for homes in areas served by State housing finance agency 
foreclosure prevention programs. 
Sec. 104. HUD action to increase access to mortgage insurance by State hous-
ing finance agencies. 
Sec. 105. State reports on use of refinancing bond authority. 
TITLE II—HOUSING TAX INCENTIVES 
Sec. 201. Temporary increase in volume cap for housing bonds issued for areas 
most affected by foreclosure crisis. 
Sec. 202. Extension of time for using increased volume cap for housing bonds. 
Sec. 203. Expansion of use of mortgage revenue bonds for mortgage refi-
nancing loans. 
Sec. 204. Alternative minimum tax limitations not applicable to refinancings of 
tax-exempt housing bonds. 
Sec. 205. Clarification of applicability to high foreclosure impact areas. 
TITLE I—EXPANSION OF STATE 
FORECLOSURE 
MITIGATION 
PROGRAMS 
SEC. 101. STABILIZATION OF THE MORTGAGE REVENUE 
BOND MARKET. 
The Secretary of the Treasury shall take all nec-
essary steps to support the mortgage revenue bond mar-
ket, including the use of amounts made available under 
title I of the Emergency Economic Stabilization Act of 
2008 to purchase mortgage revenue bonds (as defined in 
section 143 of the Internal Revenue Code of 1986) at a 
rate of interest that makes the housing programs carried 
out with the proceeds of such bonds economically feasible. 
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SEC. 102. TARP ASSISTANCE FOR REFINANCING UNDER-
WATER MORTGAGES. 
(a) AUTHORITY.—The Secretary of the Treasury 
shall carry out a program to use amounts specified in sub-
section (e) to reduce the outstanding debt on qualifying 
existing underwater mortgages in connection with the refi-
nancing of such mortgages. 
(b) QUALIFYING EXISTING UNDERWATER MORT-
GAGES.—For purposes of this section, the term ‘‘quali-
fying existing underwater mortgage’’ means a mortgage 
or mortgages on a 1- to 4-family owner-occupied residen-
tial property that has an appraised value that is less than 
the outstanding obligation under such mortgage or mort-
gages. 
(c) TERMS OF REFINANCING MORTGAGE.—The Sec-
retary may use amounts under the program under this 
section only with respect to qualifying existing underwater 
mortgages that are refinanced under a mortgage that is 
eligible to be financed with the proceeds of a mortgage 
revenue bond pursuant to section 143(k)(12) of the Inter-
nal Revenue Code of 1986. 
(d) RECAPTURE
OF
ASSISTANCE
AMOUNTS.—In 
making assistance available under the program under this 
section with respect to a qualifying existing underwater 
mortgage, the Secretary shall take such actions and enter 
into such binding agreements as are necessary to provide 
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for recovery by the Secretary, upon any sale of the residen-
tial property subsequent to the refinancing of the mort-
gage under such program, of the lesser of— 
(1) an amount equal to 50 percent of any pro-
ceeds of the sale in excess of the amount necessary 
to fully pay any outstanding obligations, including 
interest, under the refinanced mortgage; or 
(2) the amount of assistance provided under the 
program with respect to such mortgage. 
(e) USE
OF TARP AMOUNTS.—Of any amounts 
made available under title I of the Emergency Economic 
Stabilization Act of 2008 (12 U.S.C. 5211 et seq.), the 
Secretary of the Treasury shall reserve for use only under 
the program under this section, and shall use only under 
such program, amounts sufficient to provide assistance 
under the program in connection with any mortgage refi-
nanced with the proceeds of a mortgage revenue bond pur-
suant to section 143(k)(12) of the Internal Revenue Code 
of 1986. 
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SEC. 103. INTEREST RATE BUY-DOWN FOR REFINANCING 
MORTGAGES AND NEW MORTGAGES FOR 
HOMES IN AREAS SERVED BY STATE HOUS-
ING FINANCE AGENCY FORECLOSURE PRE-
VENTION PROGRAMS. 
(a) AUTHORITY.—The Federal National Mortgage 
Association and the Federal Home Loan Mortgage Cor-
poration shall each carry out a program under this section 
to purchase and securitize qualified refinancing mortgages 
and qualified new mortgages on single-family housing, in 
accordance with this section and policies and procedures 
that the Director of the Federal Housing Finance Agency 
shall establish. 
(b) PURCHASE OF QUALIFIED MORTGAGES.— 
(1) REQUIREMENT TO PURCHASE.—If a lender 
proffers to an enterprise, in accordance with require-
ments established by the Director, a mortgage or 
mortgages for purchase under this section, the en-
terprise shall make a determination of whether such 
mortgage or mortgages are qualified mortgages. 
Subject to subsection (h), if the enterprise deter-
mines that such mortgage or mortgages meet the re-
quirements for qualified mortgages, the enterprise 
shall make a commitment to purchase, and shall 
purchase, the mortgage or mortgages. 
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(2) ADVANCE
COMMITMENTS.—The Director 
shall require each enterprise to establish a procedure 
for approval of lenders to receive commitments, in 
advance of the origination of qualified mortgages, 
for purchase of such mortgages under this section by 
the enterprise. 
(c) QUALIFIED MORTGAGES.— 
(1) QUALIFIED MORTGAGE.—For purposes of 
this section, the term ‘‘qualified mortgage’’ means a 
mortgage that is a qualified refinancing mortgage or 
a qualified new mortgage. 
(2) QUALIFIED REFINANCING MORTGAGE.—For 
purposes of this section, the term ‘‘qualified refi-
nancing mortgage’’ means a mortgage that meets 
the following requirements: 
(A) SINGLE-FAMILY HOUSING IN HOUSING 
DISTRESS AREAS SERVED BY STATE HOUSING 
FINANCE
AGENCY
FORECLOSURE
REDUCTION 
PROGRAMS.—The property subject to the mort-
gage shall be a residence as defined in section 
143 of the Internal Revenue Code of 1986 that 
is located within a qualified census tract or area 
of chronic economic distress (within the mean-
ing given such terms in section 143(j) of such 
Code) that is located within a foreclosure crisis 
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State (as such term is defined in section 
146(d)(6) of such Code). 
(B) PRINCIPAL
RESIDENCE.—The mort-
gagor under the mortgage shall satisfy the re-
quirement in section 143(c)(1) of the Internal 
Revenue Code of 1986. 
(C) REFINANCING.—The principal loan 
amount repayment of which is secured by the 
mortgage shall be used to satisfy all indebted-
ness under an existing first mortgage that— 
(i) was made for purchase of, or refi-
nancing another first mortgage on, the 
same property that is subject to the quali-
fied refinancing mortgage; and 
(ii) was originated on or before Janu-
ary 1, 2008. 
(D) INTEREST
RATE; TERM
TO
MATU-
RITY.—The mortgage shall— 
(i) bear interest at a single annual 
rate that is fixed for the entire term of the 
mortgage, which shall not exceed the an-
nual rate that is 100 basis points less than 
the prevailing annual interest rate for 
mortgages of similar type and term to ma-
turity, as determined by the Director; and 
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(ii) have a term to maturity of not 
less than 30 years and not more than 40 
years from the date of the beginning of the 
amortization of the mortgage. 
(E) 
UNDERWRITING
STANDARDS.—The 
mortgage shall meet such underwriting stand-
ards as the Director shall require. 
(F) 
WAIVER
OF
PREPAYMENT
PEN-
ALTIES.—All penalties for prepayment or refi-
nancing of the underlying mortgage refinanced 
by the mortgage, and all fees and penalties re-
lated to the default or delinquency on such 
mortgage, shall have been waived or forgiven. 
(3) QUALIFIED NEW MORTGAGE.—For purposes 
of this section, the term ‘‘qualified new mortgage’’ 
means a mortgage that meets the following require-
ments: 
(A) TERMS.—The mortgage meets the re-
quirements under subparagraphs (A), (B), (D), 
and (E) of paragraph (2). 
(B) HOME PURCHASE.—The principal loan 
amount repayment of which is secured by the 
mortgage shall be used to purchase the prop-
erty that is subject to the qualified new mort-
gage. 
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(C) NEW MORTGAGES.—The mortgage was 
originated on or after the date of the enactment 
of this Act. 
(d) EXCEPTIONS TO UNDERWRITING STANDARDS.— 
Each enterprise shall establish such exceptions to the un-
derwriting standards of the enterprise, including downpay-
ment and credit rating standards, that conform to the un-
derwriting standards established pursuant to subsection 
(c)(2)(E), as may be necessary to allow the enterprise to 
purchase and securitize qualified refinancing mortgages 
and qualified new mortgages under this section, in accord-
ance with such requirements as the Director shall estab-
lish. 
(e) SECURITIZATION.— 
(1) REQUIREMENT.—Each enterprise shall, 
upon such terms and conditions as it may prescribe, 
set aside any qualified mortgages purchased by it 
under this section and, upon approval of the Sec-
retary of the Treasury, issue and sell securities 
based upon such mortgages set aside. 
(2) FORM.—Securities issued under this sub-
section may be in the form of debt obligations or 
trust certificates of beneficial interest, or both. 
(3) TERMS.—Securities issued under this sub-
section shall have such maturities and bear such 
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rate or rates of interest as may be determined by the 
enterprise with the approval of the Secretary. 
(4) EXEMPTION.—Securities issued by an en-
terprise under this subsection shall, to the same ex-
tent as securities which are direct obligations of or 
obligations guaranteed as to principal and interest 
by the United States, be deemed to be exempt secu-
rities within the meaning of laws administered by 
the Securities and Exchange Commission. 
(5) PRINCIPAL
AND
INTEREST
PAYMENTS.— 
Mortgages set aside pursuant to this subsection shall 
at all times be adequate to enable the issuing enter-
prise to make timely principal and interest payments 
on the securities issued and sold pursuant to this 
subsection. 
(6) REQUIRED DISCLOSURE.—Each enterprise 
shall insert appropriate language in all of the securi-
ties issued under this subsection clearly indicating 
that such securities, together with the interest there-
on, are not guaranteed by the United States and do 
not constitute a debt or obligation of the United 
States or any agency or instrumentality thereof 
other than the enterprise. 
(f) FEDERAL RESERVE FINANCING FACILITY.—The 
Secretary of the Treasury shall establish a credit facility 
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of the Federal Reserve System to make credit available 
to the enterprises at interest rates comparable to rates on 
securities issued by the Secretary of the Treasury under 
chapter 31 of title 31, United States Code, and having 
comparable terms, as determined by the Board. 
(g) DEFINITIONS.—For purposes of this Act, the fol-
lowing definitions shall apply: 
(1) DIRECTOR.—The term ‘‘Director’’ means 
the Director of the Federal Housing Finance Agen-
cy. 
(2) 
ENTERPRISE.—The 
term 
‘‘enterprise’’ 
means the Federal National Mortgage Association 
and the Federal Home Loan Mortgage Corporation. 
(3) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(h) TERMINATION.—The requirement under sub-
section (b)(1) for the enterprises to purchase mortgages 
shall not apply to any mortgage proffered to an enterprise 
after December 31, 2010. 
SEC. 104. HUD ACTION TO INCREASE ACCESS TO MORT-
GAGE INSURANCE BY STATE HOUSING FI-
NANCE AGENCIES. 
The Secretary of Housing and Urban Development 
shall take all necessary actions, in consultation and coordi-
nation with State housing finance agencies, to increase ac-
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cess by such agencies to mortgage insurance for the pur-
pose of making such insurance available in connection with 
mortgages financed by bonds issued by such agencies pur-
suant to this Act and the amendments made by this Act. 
SEC. 105. STATE REPORTS ON USE OF REFINANCING BOND 
AUTHORITY. 
Not later than the expiration of the 6-month period 
beginning upon the date of the enactment of this Act and 
every six months thereafter until the refinancing bond au-
thority provided by the amendments made by title II of 
this Act has been exhausted, each State using the refi-
nancing authority provided by the amendments made by 
section 3021 of the Housing and Economic Recovery Act 
of 2008 (Public Law 110–289; 122 Stat. 2892) shall sub-
mit a report to the Congress specifying— 
(1) the amount of the refinancing bond author-
ity provided for the State under the amendments 
made by such section 3021 and title II of this Act 
that remains; 
(2) the number of homes that have been refi-
nanced using such refinancing authority of the 
State; and 
(3) the counties and municipalities in the State 
in which homes are located that are subject to mort-
gages refinanced using such refinancing authority 
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