II 110th CONGRESS 2d Session S. 2574 IN THE SENATE OF THE UNITED STATES January 30, 2008 Mr. Reid (for Mrs. Clinton) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to allow the use of qualified mortgage revenue bonds for refinancing mortgages and to provide a temporary increase in the volume cap for such bonds.

1.

Short title

This Act may be cited as the Mortgage Refinancing Initiative Act of 2008.

2.

Use of mortgage bonds for refinancings

(a)

Temporary use of qualified mortgage bonds proceeds for refinancing existing mortgages

Section 143(k) of the Internal Revenue Code of 1986 (relating to other definitions and special rules) is amended by adding at the end the following new paragraph: (12)

Certain mortgage refinancings allowed

(A)

In general

Notwithstanding the requirements of subsection (i)(1), the proceeds of a qualified mortgage issue may be used to refinance an existing mortgage. (B)

Special rules

In applying this paragraph to any case in which the proceeds of a qualified mortgage issue are used for any refinancing described in subparagraph (A)— (i)subsection (a)(2)(D)(i) shall be applied by substituting 12-month period for 42-month period each place it appears, (ii)subsection (d) (relating to 3-year requirement) shall not apply, and (iii)subsection (e) (relating to purchase price requirement) shall be applied by using the market value of the residence at the time of refinancing in lieu of the acquisition cost. (C)

Termination

This paragraph shall not apply to any bonds issued after December 31, 2009. . (b)

Increased volume cap for refinancings

(1)

In general

Subsection (d) of section 146 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (5)

Temporary increase and set aside for mortgage refinancing

(A)

In general

The State ceiling for any State for any calendar year shall be increased by the amount allocated to such State by the Secretary under subparagraph (C). (B)

Limitation

There is a national limitation of the increase under this paragraph for all State ceiling for any calendar year. Such limitation is— (i)$5,000,000 for calendar year 2008, (ii)$5,000,000 for calendar year 2009, and (iii)zero for any calendar year after 2009. (C)

Allocation by Secretary

Not later than 45 days after the date of the enactment of this paragraph, the Secretary shall prescribe regulations for allocating the amount described in subparagraph (B) to States. In determining the allocation of such amounts, the Secretary shall take into consideration, among other things, the severity of the foreclosure rates in the States on the date of the enactment of this paragraph. (D)

Set aside

Not less than an amount equal to each State's allocable share of the increase in the State ceiling under subparagraph (A) shall be used solely for the purpose of issuing bonds the proceeds of which are used to refinance existing mortgages. . (2)

Carryforward of unused limitations

Subsection (f) of section 146 of such Code is amended by adding at the end the following new paragraph: (6)

Special rules for increased volume cap under subsection (d)(5)

(A)

In general

No amount which is attributable to the increase under subsection (d)(5) may be used for a carryforward purpose other than issuing qualified mortgage bonds. (B)

Carryforward period

In applying paragraph (3) to any carryforward which is attributable to the increase under subsection (d)(5), the next calendar year shall be substituted for the 3 calendar years in subparagraph (A) thereof. . (c)

Effective date

The amendments made by this section shall apply to bonds issued after December 31, 2007.