I
107TH CONGRESS
2D SESSION
H. R. 3774
To amend the Internal Revenue Code of 1986 to provide a credit to promote
homeownership among low-income individuals.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 14, 2002
Mr. JEFFERSON (for himself and Mr. RANGEL) 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 provide
a credit to promote homeownership among low-income
individuals.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; FINDINGS; PURPOSES.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Home at Last Tax Credit Act of 2002’’.
(b) FINDINGS.—Congress finds the following:
(1) Homeownership is of primary importance in
building wealth in low-income families.
(2) 67 percent of the wealth that is owned by
nonelderly low-income households consists of the eq-
uity in their residences, and the median wealth of
such non-elderly low-income households is 12 times
greater than the median wealth of nonelderly renters
with the same level of income.
(3) The national homeownership rate hit a
record 68.1 percent in September 2001, but the
homeownership rates for lower-income households
are considerably less. While 82.2 percent of house-
holds earning 100 percent or more of the national
median income now own homes, only 52.6 percent of
households earning less than the national median
are homeowners. Homeownership rates among
households earning less than 80 percent of the na-
tional median are substantially less.
(4) According to the Bureau of the Census, in
1993, 88 percent of all renters and 93 percent of
renters earning less than $20,000 could not afford
a house selling for half of the regional median house
price.
(5) There is a 23 percentage point difference in
homeownership rates between central cities and sub-
urban cities, which is largely the result of the con-
centration of low-income households in central cities.
This concentration of low-income housing in central
cities makes these areas uniquely susceptible to the
negative effects of recession, such as job loss, which
has historically led to a concentration of foreclosures
in central city neighborhoods. Such concentrations of
foreclosures depress area housing value and deplete
the equity wealth of surrounding homeowners.
(6) The cost of the largest Federal tax incen-
tives for homeownership, the mortgage interest de-
duction and the real estate tax deduction, is equal
to approximately twice the amount of Federal ex-
penditures for direct Federal housing assistance
which benefits low-income households.
(7) The mortgage interest deduction and the
real estate tax deduction have little value to low-in-
come households because the itemized tax deductions
of low-income households generally do not exceed the
standard deduction.
(8) Over 90 percent of the total benefits of the
mortgage interest deduction accrue to home buyers
with incomes greater than $40,000.
(9) Current provisions in the Internal Revenue
Code of 1986 to promote homeownership among low-
income households, such as the mortgage revenue
bond program, the mortgage credit certificate pro-
gram, and the low-income housing credit, fail to si-
multaneously attack the twin constraints of lack of
wealth and low income that prevent many low-in-
come households from becoming homeowners.
(c) PURPOSES.—The purposes of this Act are—
(1) to establish a decentralized, market-driven
approach to increasing homeownership among house-
holds earning less than 80 percent of household me-
dian income; and to increase mixed-income home
ownership in new or newly renovated households lo-
cated in census tracts targeted for investment and
redevelopment by the United States Department of
Housing and Urban Development (HUD), typically
referred to as Difficult to Develop Areas (DDAs);
(2) to enable these low-income households to
overcome income constraints that frequently prevent
them from becoming homeowners and building
wealth through home equity; and
(3) to reduce the disparities in homeownership
between low-income households and higher-income
households and between central cities and suburban
cities, and attract investment into the Nation’s cen-
tral cities.
SEC. 2. HOME AT LAST TAX CREDIT.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following:
‘‘SEC. 45G. HOME AT LAST TAX CREDIT.
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
the amount of the home at last tax credit deter-
mined under this section for any taxable year in the
credit period shall be an amount equal to the appli-
cable percentage of the home at last tax credit
amount allocated such taxpayer by a State housing
finance agency in the credit allocation year under
subsection (b).
‘‘(2) APPLICABLE PERCENTAGE.—For purposes
of this section, the Secretary shall prescribe the ap-
plicable percentage for any year in which the tax-
payer is a qualified lender. Such percentage with re-
spect to any financial reporting period in the credit
period with respect to such taxpayer shall be per-
centages which will yield over such period amounts
of credit under paragraph (1) which have a present
value equal to 100 percent of the home at last tax
credit amount allocated such taxpayer under sub-
section (b).
‘‘(3) METHOD OF DISCOUNTING.—For purposes
of paragraph (2), present value shall be determined
in the same manner as the low-income housing tax
credit under section 42(b)(2)(C), except that clause
(i) thereof shall be applied as if it read ‘as of the
last day of the credit period (as defined in section
45G(f)(1))’.
‘‘(b) ALLOCATION OF HOME AT LAST TAX CREDIT
AMOUNTS.—
‘‘(1) AMOUNT
OF
CREDIT.—Each qualified
State shall receive a home at last tax credit dollar
amount for each calendar year in an amount equal
to the sum of—
‘‘(A) an amount equal to—
‘‘(i) 40 cents multiplied by the State
population, multiplied by
‘‘(ii) 10, plus
‘‘(B) the unused home at last tax credit
dollar amount (if any) of such State for the
preceding calendar year or years.
‘‘(2) QUALIFIED STATE.—For purposes of this
section—
‘‘(A) IN
GENERAL.—The term ‘qualified
State’ means a State that has 1 or more hous-
ing credit agencies with an allocation plan that
complies with the general provisions set forth in
subparagraph (B). If there is more than 1
housing credit agency of a State, all such agen-
cies shall be treated as a single agency.
‘‘(B) ALLOCATION PLAN.—For purposes of
this paragraph, the term ‘allocation plan’ means
a written plan, submitted to the Secretary by
October 15, which includes—
‘‘(i) selection criteria for the allocation
of credits to qualified lenders—
‘‘(I) based on a process in which
lenders submit bids for the value of
the credit, and
‘‘(II) which gives priority to
qualified lenders who will originate
qualified home at last loans during
the calendar year for which the tax
credits are allocated for use,
‘‘(ii) an assurance that the State will
not allocate in excess of 10 percent of the
home at last tax credit amount for the cal-
endar year for qualified home at last loans
which 
are 
neighborhood 
revitalization
project loans,
‘‘(iii) an assurance that the State will
not allocate in excess of 15 percent of the
home at last tax credit amount for the cal-
endar year to one qualified lender,
‘‘(iv) an assurance that the State will
not allow more than 25 percent of the
home at last tax credit amount for the cal-
endar year to be used to subsidize home
purchases or new home construction for
qualified borrowers earning in excess of
120 percent of household median income,
‘‘(v) a procedure that the agency (or
an agent or other private contractor of
such agency) will follow in monitoring for
noncompliance with the provisions of this
section and in notifying the Internal Rev-
enue Service of such noncompliance with
respect to which such agency becomes
aware, and
‘‘(vi) such other assurances as the
Secretary may require.
‘‘(3) QUALIFIED
LENDER.—For purposes of
this section, the term ‘qualified lender’ means a
lender which—
‘‘(A) is an insured depository institution
(as defined in section 3 of the Federal Deposit
Insurance Act), an insured credit union (as de-
fined in section 101(7) of the Federal Credit
Union Act), community development financial
institution (as defined in section 103 of the
Community Development Banking and Finan-
cial Institutions Act of 1994 (12 U.S.C. 4702)),
or nonprofit community development corpora-
tion (as defined in section 613 of the Commu-
nity Economic Development Act of 1981 (42
U.S.C. 9802)), and
‘‘(B) during the 1-year period beginning on
the date of the credit allocation, uses its own
funds to buy down the interest rate charged of
a qualified borrower such that the aggregate
amount of funds applied as prepaid points is
not less than the amount of the bid of such
lender for such credit allocation.
‘‘(4) CARRYOVER OF CREDIT.—A home at last
tax credit amount received by a State for any cal-
endar year and not allocated in such year shall re-
main available to be allocated in the succeeding cal-
endar year.
‘‘(5) POPULATION.—For purposes of this sec-
tion, population shall be determined in accordance
with section 146(j).
‘‘(6) COST-OF-LIVING ADJUSTMENT.—
‘‘(A) IN GENERAL.—In the case of a cal-
endar year after 2002, the 40 cent amount con-
tained in paragraph (1)(A)(i) shall be increased
by an amount equal to—
‘‘(i) such amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such
calendar year by substituting ‘calendar
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple
of 5 cents, such amount shall be rounded to the
next lowest multiple of 5 cents.
‘‘(c) QUALIFIED HOME AT LAST LOAN DEFINED.—
For purposes of this section, the term ‘qualified home at
last loan’ means a first mortgage single-family residential
loan funded by a qualified lender to finance the purchase
or construction or purchase and construction of a resi-
dence by a qualified borrower which has a lower-than-mar-
ket interest rate as a result of a lender rate ‘buydown’,
but only if—
‘‘(1) the requirements of subsections (d) and (e)
are met,
‘‘(2) subject to paragraph (6), the proceeds
from such loan are applied exclusively—
‘‘(A) to acquire such residence, or
‘‘(B) to acquire and substantially improve
such residence in connection with a neighbor-
hood revitalization project, or
‘‘(C) to build a residence,
‘‘(3) the principal amount of the loan is not
greater than 105 percent of the purchase price of
the residence securing the loan,
‘‘(4) the loan results in a monthly housing ex-
pense-to-income ratio with respect to such residence
of not more than 33 percent at the time of closing,
‘‘(5) the total of prepaid points used to buy
down the effective interest rate is not more than—
‘‘(A) $10,000 for qualified borrowers earn-
ing greater than 70 percent of area household
median income,
‘‘(B) $20,000 for qualified borrowers earn-
ing 70 percent or less of area household median
income,
‘‘(C) in the case of a neighborhood revital-
ization project loan, subparagraph (A) shall be
applied by substituting ‘$15,000’ for ‘$10,000’,
and subparagraph (B) shall be applied by sub-
stituting ‘$25,000’ for ‘$20,000’, or
‘‘(D) in the case of a below-market-rate
loan offered by a State housing finance agency
in conjunction with a mortgage revenue bond
program, subparagraph (A) shall be applied by
substituting ‘$5,000’ for ‘$10,000’, and sub-
paragraph (B) shall be applied by substituting
‘$10,000’ for ‘$20,000’,
‘‘(6) the loan has a term of 30 years,
‘‘(7) the loan has a fixed interest rate and fully
amortizes over the term of the mortgage,
‘‘(8) the loan is a conventional single-family
first mortgage, a government-guaranteed single-fam-
ily first mortgage, or a single-family first mortgage
originated under a program which is administered
by the State and which is in existence on the date
of enactment of this section, and
‘‘(9) the loan is in an amount not greater than
the maximum principal obligation amount eligible
for insurance under section 203(b)(2) of the Na-
tional Housing Act (12 U.S.C. 1709)(b)(2)) for a 1-
family dwelling.
‘‘(d) MORTGAGOR.—
‘‘(F) who attends pre-purchase home-
ownership counseling provided by a qualified
nonprofit organization consistent with stand-
ards established by the American Homeowner-
ship 
Education 
and 
Counseling 
Institute
(AHECI).
‘‘(2) DETERMINATION
OF
HOUSEHOLD
IN-
COME.—For purposes of this subsection and sub-
section (h), the household income of a mortgagor
and area median gross income shall be determined
in accordance with section 143(f)(2).
‘‘(e) RESIDENCE REQUIREMENTS.—A loan meets the
requirements of this subsection if it is secured by a resi-
dence that is—
‘‘(1) a single-family residence which is the prin-
cipal residence (within the meaning of section 121)
of the mortgagor, or can reasonably be expected to
become the principal residence of the mortgagor
within a reasonable time after the financing is pro-
vided,
‘‘(2) purchased by the mortgagor with a down
payment in an amount not less than the lesser of—
‘‘(A) 1 percent of the purchase price, or
‘‘(B) $1,000, and
‘‘(3) in the case of a mortgagor with a house-
hold income greater than 50 percent of the area me-
dian gross income, as determined under subsection
(d)(1)(A), not financed in connection with a quali-
fied mortgage issued under section 143. For pur-
poses of paragraph (1), a manufactured home shall
not be treated as a single-family residence unless
such home meets the requirements of section 604(h)
of the Housing and Community Development Act of
1974.
‘‘(f) DEFINITION AND SPECIAL RULES.—
‘‘(1) CREDIT PERIOD DEFINED.—For purposes
of this section, the term ‘credit period’ means the
taxable year in which a home at last tax credit
amount is allocated to the taxpayer.
‘‘(2) DISPOSITION OF HOME AT LAST LOANS.—
If a qualified home at last loan is disposed of in the
12 months following its closing date as a result of
a borrower default, the taxpayer forfeits the credit
making it available for reallocation by the State.
‘‘(3) PREPAYMENT OF HOME AT LAST LOANS.—
If, during the 12 months following its closing date,
a qualified home at last loan is fully repaid by the
borrower, the lender may claim only a portion of the
tax credit with the remainder being forfeited and
available for reallocation. The portion of tax credit
that can be claimed is determined by dividing the
number of days that have passed between the closing
date and the date of payoff by 365 and multiplying
that number by the value of the tax credit allocated
to the lender for the purposes of originating the pre-
paid home at last loan.
‘‘(g) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) 
NEIGHBORHOOD
REVITALIZATION
PROJECT LOAN.—
‘‘(A) IN GENERAL.—The term ‘neighbor-
hood revitalization project loan’ means a loan
secured by a first mortgage on a one- to four-
family residence, the proceeds of which are used
to substantially improve such residence in con-
nection with a neighborhood revitalization
project.
‘‘(B) 
NEIGHBORHOOD
REVITALIZATION
PROJECT.—The term ‘neighborhood revitaliza-
tion project’ means a project of sufficient size
and scope to alleviate physical deterioration and
stimulate investment in—
‘‘(i) a geographic location within the
jurisdiction of a unit of local government
(but not the entire jurisdiction) designated
in comprehensive plans, ordinances, or
other documents as a neighborhood, vil-
lage, or similar geographic designation, or
‘‘(ii) the entire jurisdiction of a unit
of local government if the population of
such jurisdiction is not in excess of 25,000.
‘‘(2) STATE.—The term ‘State’ includes a pos-
session of the United States.
‘‘(3) STATE HOUSING FINANCE AGENCY.—The
term ‘State housing finance agency’ means the pub-
lic agency, authority, corporation, or other instru-
mentality of a State that has the authority to pro-
vide residential mortgage loan financing throughout
the State.
‘‘(h) CERTIFICATION AND OTHER REPORTS TO THE
SECRETARY.—
‘‘(1) CERTIFICATION WITH RESPECT TO STATE
ALLOCATION OF HOME AT LAST TAX CREDITS.—The
Secretary may, upon a finding of noncompliance, re-
voke the certification of a qualified State and revoke
any qualified home at last tax credit amounts allo-
cated to such State or allocated by such State to a
qualified lender.
‘‘(2) ANNUAL REPORT FROM HOUSING FINANCE
AGENCIES.—Each State housing finance agency
which allocates any home at last tax credit amount
to any qualified lender for any calendar year shall
make available to the public no later than November
1 of the following year) an annual report
specifying—
‘‘(A) the home at last tax credit amount
allocated to each qualified lender for such year,
and
‘‘(B) with respect to each qualified
lender—
‘‘(i) the principal amount of each
qualified home at last loan made by such
lender in such year,
‘‘(ii) the number of qualified home at
last loans made by such lender in such
year,
‘‘(iii) the interest rate prior to
buydown and the effective interest rate
after buydown of each qualified home at
last loan,
‘‘(iv) the status of each qualified
homeownership 
loan 
defined 
as 
‘per-
forming’, ‘delinquent less than 60 days’,
‘delinquent 60 days or more’, or ‘in fore-
closure’,
‘‘(v) the household income as a per-
cent of area median household income of
each qualified borrower,
‘‘(vi) any other information the Sec-
retary may deem essential to assuring fair
mortgage pricing and that the benefit of
the tax credit is being passed through the
taxpayer to the qualified borrower in the
form of a lower interest rate, and
‘‘(vii) 
the 
penalty 
under 
section
6652(j) shall apply to any failure to pro-
vide the report required by this paragraph
on the date prescribed herein.
‘‘(i) REGULATIONS.—The Secretary may prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(b) LIMITATION ON CARRYBACK OF UNUSED CRED-
IT.—Subsection (d) of section 39 of the Internal Revenue
Code of 1986 (relating to carryback and carryforward of
unused credits) is amended by adding at the end the fol-
lowing:
‘‘(11) NO CARRYBACK OF HOME AT LAST TAX
CREDITS BEFORE EFFECTIVE DATE.—No portion of