[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2666 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2666

 To amend the Internal Revenue Code of 1986 to encourage investment in 
              affordable housing, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           February 25, 2008

 Ms. Cantwell (for herself, Mr. Smith, Mr. Kerry, Mr. Coleman, and Mr. 
   Salazar) 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 encourage investment in 
              affordable housing, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE, ETC.

    (a) Short Title.--This Act may be cited as the ``Affordable Housing 
Investment Act of 2008''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title, etc.
       TITLE I--FACILITATE DEVELOPMENT OF HOUSING CREDIT PROPERTY

Sec. 101. Renaming the low-income housing credit as the affordable 
                            housing credit.
Sec. 102. Modification of rules for determining applicable percentage.
Sec. 103. Increase in credit for buildings in State designated areas.
Sec. 104. Modification of scattered site rule.
Sec. 105. Treatment of rural projects.
Sec. 106. Expansion of allowable basis for community service 
                            facilities.
   TITLE II--IMPROVE COORDINATION WITH OTHER FEDERAL HOUSING PROGRAMS

Sec. 201. Affordable housing credits allowed for section 8 moderate 
                            rehabilitation developments.
Sec. 202. Modification to low-income housing credit rules for reduction 
                            of eligible basis by grants received.
   TITLE III--FACILITATE PRIVATE INVESTMENT CAPITAL TO INCREASE THE 
              EFFICIENCY OF AFFORDABLE HOUSING INVESTMENT

Sec. 301. Repeal of recapture bond rule.
Sec. 302. Affordable housing credit allowed against alternative minimum 
                            tax.
Sec. 303. Interest on qualified mortgage bonds, qualified veterans' 
                            mortgage bonds, and qualified residential 
                            rental project exempt facility bonds exempt 
                            from alternative minimum tax.
          TITLE IV--HELP PRESERVE EXISTING AFFORDABLE HOUSING

Sec. 401. Repeal of 10-year rule for acquisition housing credits.
Sec. 402. Modification of related person rule for affordable housing 
                            credit.
     TITLE V--SIMPLIFY ADMINISTRATION OF THE HOUSING CREDIT PROGRAM

Sec. 501. Elimination of certain annual recertifications of tenant 
                            incomes.
  TITLE VI--CONFORM MULTIFAMILY HOUSING BOND RULES TO HOUSING CREDIT 
                                 RULES

Sec. 601. Coordination of certain rules applicable to affordable 
                            housing credit and qualified residential 
                            rental project exempt facility bonds.
          TITLE VII--IMPROVE THE MORTGAGE REVENUE BOND PROGRAM

Sec. 701. Special rule for use of mortgage bonds for disaster victims, 
                            single parents, and homemakers.
Sec. 702. Repeal of required use of certain principal repayments on 
                            qualified mortgage issues to redeem bonds.
                       TITLE VIII--EFFECTIVE DATE

Sec. 801. Effective date.

       TITLE I--FACILITATE DEVELOPMENT OF HOUSING CREDIT PROPERTY

SEC. 101. RENAMING THE LOW-INCOME HOUSING CREDIT AS THE AFFORDABLE 
              HOUSING CREDIT.

    (a) In General.--The heading of section 42 (relating to low-income 
housing credit) is amended by striking ``low-income'' and inserting 
``affordable''.
    (b) Conforming Amendments.--
            (1) Sections 38(b)(5), 42(a), 772(a)(7), and 772(d)(5) are 
        each amended by striking ``low-income'' and inserting 
        ``affordable''.
            (2) The headings of subparagraphs (3)(D) and (6)(B) of 
        section 469(i) are each amended by striking ``low-income'' and 
        inserting ``affordable''.
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by striking the item 
        relating to section 42 and inserting the following:

``Sec. 42. Affordable housing credit.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. MODIFICATION OF RULES FOR DETERMINING APPLICABLE PERCENTAGE.

    (a) In General.--Subsection (b) of section 42 is amended--
            (1) by striking the semicolon and all that follows to the 
        period in the heading,
            (2) by striking paragraph (1) and inserting the following 
        new paragraph:
            ``(1) In general.--For purposes of this section, the term 
        `applicable percentage' means the greater of the alternative 
        applicable percentage determined under paragraph (2) or--
                    ``(A) 9 percent in the case of any building to 
                which subparagraph (B) does not apply, and
                    ``(B) 4 percent in the case of--
                            ``(i) any existing building, and
                            ``(ii) any new building if, at any time 
                        during the taxable year or any prior taxable 
                        year, there is or was outstanding any 
                        obligation--
                                    ``(I) not taken into account under 
                                section 146,
                                    ``(II) which is exempt from tax 
                                under section 103, and
                                    ``(III) the proceeds of which are 
                                or were used (directly or indirectly) 
                                with respect to such building or the 
                                operation thereof.'',
            (3) by striking ``Buildings placed in service after 1987'' 
        in the heading for paragraph (2) and inserting ``Alternative 
        applicable percentage'', and
            (4) by striking ``In the case of any qualified low-income 
        building placed in service by the taxpayer after 1987, the term 
        `applicable percentage' means'' in paragraph (2)(A) and 
        inserting ``For purposes of paragraph (1), the term 
        `alternative applicable percentage' means''.
    (b) Modification of Rules Related to Federal Subsidies.--
            (1) In general.--Paragraph (2) of section 42(i) (relating 
        to determination of whether building is Federally subsidized) 
        is amended to read as follows:
            ``(2) Exceptions for certain new buildings otherwise 
        subject to 4 percent credit limitation.--
                    ``(A) Election to reduce eligible basis by proceeds 
                of obligations.--A tax-exempt obligation shall not be 
                taken into account under subsection (b)(1)(B)(ii) if 
                the taxpayer elects to exclude the proceeds of such 
                obligation from the eligible basis of the building for 
                purposes of subsection (d).
                    ``(B) Special rule for subsidized construction 
                financing.--A tax-exempt obligation used to provide 
                construction financing for any building shall not be 
                taken into account under subsection (b)(1)(B)(ii) if--
                            ``(i) such obligation (when issued) 
                        identified the building for which the proceeds 
                        of such obligation would be used, and
                            ``(ii) such obligation is redeemed before 
                        such building is placed in service.''.
            (2) Conforming amendment.--Section 1400N(c)(6) is amended 
        by striking ``December 31, 2010'' and inserting ``the date of 
        the enactment of the Affordable Housing Investment Act of 
        2008''.

SEC. 103. INCREASE IN CREDIT FOR BUILDINGS IN STATE DESIGNATED AREAS.

    (a) In General.--Clause (i) of section 42(d)(5)(C) (relating to 
increase in credit for buildings in high cost areas) is amended by 
striking ``or difficult development area'' and inserting ``, difficult 
development area, or State designated project''.
    (b) State Designated Project.--Subparagraph (C) of section 42(d)(5) 
is amended by adding at the end the following new clause:
                            ``(v) State designated project.--For 
                        purposes of this subparagraph, the term `State 
                        designated project' means any project published 
                        as part of a State's qualified allocation plan 
                        (as defined in subsection (m)(1)(B)) and 
                        designated by the housing credit agency as 
                        meeting such criteria for designation under 
                        this clause as the State in which such project 
                        is located may specify. The rules of clauses 
                        (ii)(II) and (iii)(II) shall not apply for 
                        purposes designations made under this 
                        clause.''.
    (c) Conforming Amendment.--The heading of subparagraph (C) of 
section 42(d)(5) is amended by striking ``buildings in high cost 
areas'' and inserting ``certain buildings''.

SEC. 104. MODIFICATION OF SCATTERED SITE RULE.

    Paragraph (7) of section 42(g) (relating to scattered site 
projects) is amended to read as follows:
            ``(7) Scattered site projects.--Buildings which would (but 
        for their lack of proximity) be treated as a project for 
        purposes of this section shall be so treated if the rent-
        restricted (within the meaning of paragraph (2)) residential 
        units of such project are distributed among such buildings in 
        proportion to the number of residential units in each 
        building.''.

SEC. 105. TREATMENT OF RURAL PROJECTS.

    Section 42(i) (relating to definitions and special rules) is 
amended by adding at the end the following new paragraph:
            ``(8) Treatment of rural projects.--For purposes of this 
        section, in the case of any project for residential rental 
        property located in a rural area (as defined in section 520 of 
        the Housing Act of 1949), any income limitation measured by 
        reference to area median gross income shall be measured by 
        reference to the greater of area median gross income or 
        national non-metropolitan median income.''.

SEC. 106. EXPANSION OF ALLOWABLE BASIS FOR COMMUNITY SERVICE 
              FACILITIES.

    Section 42(d)(4)(C) (relating to inclusion of basis of property 
used to provide services for certain nontenants) is amended--
            (1) by striking ``10 percent of the eligible basis'' in 
        clause (ii)and inserting ``20 percent of the first $5,000,000 
        in eligible basis plus 10 percent of the remaining eligible 
        basis'', and
            (2) by adding at the end the following new flush sentences:
                ``For each calendar year beginning after 2008, the 
                dollar amount in clause (ii) shall be increased by an 
                amount equal to such dollar amount multiplied by the 
                cost-of-living adjustment determined under section 
                1(f)(3), determined by substituting `calendar year 
                2007' for `calendar year 1992' in subparagraph (B) 
                thereof. If any amount adjusted under the preceding 
                sentence is not a multiple of $100,000, such amount 
                shall be rounded to the next lowest multiple of 
                $100,000.''.

   TITLE II--IMPROVE COORDINATION WITH OTHER FEDERAL HOUSING PROGRAMS

SEC. 201. AFFORDABLE HOUSING CREDITS ALLOWED FOR SECTION 8 MODERATE 
              REHABILITATION DEVELOPMENTS.

    Paragraph (2) of section 42(c) (relating to qualified low-income 
building) is amended by striking the last sentence.

SEC. 202. MODIFICATION TO LOW-INCOME HOUSING CREDIT RULES FOR REDUCTION 
              OF ELIGIBLE BASIS BY GRANTS RECEIVED.

    (a) In General.--The Secretary of the Treasury shall modify 
Treasury Regulations section 1.42-16(b) to provide that none of the 
following shall be considered a grant made with respect to a building 
or its operation for purposes of section 42(d)(5)(A) of the Internal 
Revenue Code of 1986:
            (1) Rental assistance under section 521 of the Housing Act 
        of 1949 (42 U.S.C. 1490a).
            (2) Assistance under section 538(f)(5) of the Housing Act 
        of 1949 (42 U.S.C. 1490p-2(f)(5)).
            (3) Interest reduction payments under section 236 of the 
        National Housing Act (12 U.S.C. 1715z-1).
            (4) Rental assistance under section 202 of the Housing Act 
        of 1959 (12 U.S.C. 1701q).
            (5) Rental assistance under section 811 of the Cranston-
        Gonzalez National Affordable Housing Act (42 U.S.C. 8013).
            (6) Modernization, operating, and rental assistance 
        pursuant to section 202 of the Native American Housing 
        Assistance and Self-Determination Act of 1996 (25 U.S.C. 4132).
            (7) Assistance under title IV of the Stewart B. McKinney 
        Homeless Assistance Act (42 U.S.C. 11361 et seq.).
            (8) Tenant-based rental assistance under section 212 of the 
        Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 
        12742).
            (9) Assistance under the AIDS Housing Opportunity Act (42 
        U.S.C. 12901 et seq.).
            (10) Per diem payments under section 2012 of title 38, 
        United States Code.
            (11) Rent supplements under section 101 of the Housing and 
        Urban Development Act of 1965 (12 U.S.C. 1701s).
            (12) Assistance under section 542 of the Housing Act of 
        1949 (42 U.S.C. 1490r).
            (13) Any other ongoing payment used to enable the property 
        to be rented to low-income tenants.
    (b) Effective Date.--The modifications required by this section 
shall take effect on the date of the enactment of this Act.
    (c) No Inference.--Nothing contained in subsection (a) may be 
construed to create any inference with respect to the consideration of 
any program specified under subsection (a) as a grant made with respect 
to a building or its operation for purposes of section 42(d)(5)(A) of 
the Internal Revenue Code of 1986 as in effect on the day before such 
date of enactment.

   TITLE III--FACILITATE PRIVATE INVESTMENT CAPITAL TO INCREASE THE 
              EFFICIENCY OF AFFORDABLE HOUSING INVESTMENT

SEC. 301. REPEAL OF RECAPTURE BOND RULE.

    (a) In General.--Paragraph (6) of section 42(j) (relating to 
recapture of credit) is amended to read as follows:
            ``(6) No recapture on disposition of building (or interest 
        therein) reasonably expected to continue as a qualified low-
        income building.--
                    ``(A) In general.--In the case of a disposition of 
                a building or an interest therein, the taxpayer shall 
                be discharged from liability for any additional tax 
                under this subsection by reason of such disposition if 
                it is reasonably expected that such building will 
                continue to be operated as a qualified low-income 
                building for the remaining compliance period with 
                respect to such building.
                    ``(B) Statute of limitations.--
                            ``(i) Extension of period.--The period for 
                        assessing a deficiency attributable to the 
                        application of subparagraph (A) with respect to 
                        a building (or interest therein) during the 
                        compliance period with respect to such building 
                        shall not expire before the expiration of 3 
                        years after the end of such compliance period.
                            ``(ii) Assessment.--Such deficiency may be 
                        assessed before the expiration of the 3-year 
                        period referred to in clause (i) 
                        notwithstanding the provisions of any other law 
                        or rule of law which would otherwise prevent 
                        such assessment.''.
    (b) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 (relating to information concerning transactions 
        with other persons) is amended by inserting after section 6050V 
        the following new section:

``SEC. 6050W. RETURNS RELATING TO PAYMENT OF LOW-INCOME HOUSING CREDIT 
              REPAYMENT AMOUNT.

    ``(a) Requirement of Reporting.--Every person who, at any time 
during the taxable year, is an owner of a building (or an interest 
therein)--
            ``(1) which is in the compliance period at any time during 
        such year, and
            ``(2) with respect to which recapture is required by 
        section 42(j),
shall, at such time as the Secretary may prescribe, make the return 
described in subsection (b).
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each person 
                who, with respect to such building or interest, was 
                formerly an investor in such owner at any time during 
                the compliance period,
                    ``(B) the amount (if any) of any credit recapture 
                amount required under section 42(j), and
                    ``(C) such other information as the Secretary may 
                prescribe.
    ``(c) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each person whose name is required to 
be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such person.
The written statement required under the preceding sentence shall be 
furnished on or before March 31 of the year following the calendar year 
for which the return under subsection (a) is required to be made.
    ``(d) Compliance Period.--For purposes of this section, the term 
`compliance period' has the meaning given such term by section 
42(i).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) 
                (relating to definitions) is amended by inserting after 
                clause (xxi) the following new clause:
                            ``(xxii) section 6050W (relating to returns 
                        relating to payment of low-income housing 
                        credit repayment amount),''.
                    (B) Paragraph (2) of section 6724(d) is amended by 
                striking ``or'' at the end of subparagraph (BB), by 
                striking the period at the end of subparagraph (CC) and 
                inserting ``, or'', and by adding after subparagraph 
                (CC) the following new subparagraph:
                    ``(DD) section 6050W (relating to returns relating 
                to payment of low-income housing credit repayment 
                amount).''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part III of subchapter A of chapter 61 is amended by 
        inserting after the item relating to section 6050V the 
        following new item:

``Sec. 6050W. Returns relating to payment of low-income housing credit 
                            repayment amount.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to any liability for the credit recapture 
        amount under section 42(j) of the Internal Revenue Code of 1986 
        that arises after the date of the enactment of this Act.
            (2) Special rule for low-income housing buildings sold 
        before date of enactment of this act.--In the case of a 
        building disposed of before the date of the enactment of this 
        Act with respect to which the taxpayer posted a bond (or 
        alternative form of security) under section 42(j) of the 
        Internal Revenue Code of 1986 (as in effect before such date of 
        enactment), the taxpayer may elect (by notifying the Secretary 
        of the Treasury in writing)--
                    (A) to cease to be subject to the bond requirements 
                under section 42(j)(6) of such Code, as in effect 
                before such date of enactment, and
                    (B) to be subject to the requirements of section 
                42(j) of such Code, as amended by this section.

SEC. 302. AFFORDABLE HOUSING CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM 
              TAX.

    (a) In General.--Subparagraph (B) of section 38(c)(4) (relating to 
special rules for specified credits) is amended by redesignating 
clauses (ii), (iii), and (iv) as clauses (iii), (iv), and (v), 
respectively, and by inserting after clause (i) the following new 
clause:
                            ``(ii) the credit determined under section 
                        42(a),''.
    (b) Effective Date.--The amendments made by this subsection shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 303. INTEREST ON QUALIFIED MORTGAGE BONDS, QUALIFIED VETERANS' 
              MORTGAGE BONDS, AND QUALIFIED RESIDENTIAL RENTAL PROJECT 
              EXEMPT FACILITY BONDS EXEMPT FROM ALTERNATIVE MINIMUM 
              TAX.

    (a) In General.--Clause (ii) of section 57(a)(5)(C) (relating to 
exception for qualified 501(c)(3) bonds) is amended to read as follows:
                            ``(ii) Exception for certain bonds.--For 
                        purposes of clause (i), the term `private 
                        activity bond' shall not include--
                                    ``(I) any qualified 501(c)(3) bond 
                                (as defined in section 145);
                                    ``(II) any qualified mortgage bond 
                                (as defined in section 143(a));
                                    ``(III) any qualified veterans' 
                                mortgage bond (as defined in section 
                                143(b)); and
                                    ``(IV) any exempt facility bond (as 
                                defined in section 142(a)) issued as 
                                part of an issue 95 percent or more of 
                                the net proceeds of which are to be 
                                used to provide qualified residential 
                                rental projects (as defined in section 
                                142(d)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds originally issued after the date of the enactment of this Act.

          TITLE IV--HELP PRESERVE EXISTING AFFORDABLE HOUSING

SEC. 401. REPEAL OF 10-YEAR RULE FOR ACQUISITION HOUSING CREDITS.

    (a) In General.--Subparagraph (B) of section 42(d)(2) (relating to 
existing buildings) is amended by striking clause (ii) and by 
redesignating clauses (iii) and (iv) as clauses (ii) and (iii), 
respectively.
    (b) Conforming Amendment.--Section 42(d) is amended by striking 
paragraph (6) and by redesignating paragraph (7) as paragraph (6).

SEC. 402. MODIFICATION OF RELATED PERSON RULE FOR AFFORDABLE HOUSING 
              CREDIT.

    (a) In General.--Clause (iii) of section 42(d)(2)(D) (related to 
related person, etc.) is amended to read as follows:
                            ``(iii) Related person.--For purposes of 
                        subparagraph (B)(iii), a person (hereinafter in 
                        this subclause referred to as the `related 
                        person') is related to any person if the 
                        related person bears a relationship to such 
                        person specified in section 267(b) or 
                        707(b)(1), or the related person and such 
                        person are engaged in trades or businesses 
                        under common control (within the meaning of 
                        subsections (a) and (b) of section 52.''.
    (b) Effective Date.--The amendment made by this subsection shall 
take effect on the date of the enactment of this Act.

     TITLE V--SIMPLIFY ADMINISTRATION OF THE HOUSING CREDIT PROGRAM

SEC. 501. ELIMINATION OF CERTAIN ANNUAL RECERTIFICATIONS OF TENANT 
              INCOMES.

    Paragraph (8) of section 42(g) (relating to qualified low-income 
housing project) is amended--
            (1) by striking ``may waive'' in the mater preceding 
        subparagraph (A);
            (2) by inserting ``may waive'' before ``any recapture'' in 
        subparagraph (A); and
            (3) by inserting ``shall waive'' before ``any annual 
        recertification'' in subparagraph (B).

  TITLE VI--CONFORM MULTIFAMILY HOUSING BOND RULES TO HOUSING CREDIT 
                                 RULES

SEC. 601. COORDINATION OF CERTAIN RULES APPLICABLE TO AFFORDABLE 
              HOUSING CREDIT AND QUALIFIED RESIDENTIAL RENTAL PROJECT 
              EXEMPT FACILITY BONDS.

    (a) Determination of Next Available Unit.--Paragraph (3) of section 
142(d) (relating to current income determinations) is amended by adding 
at the end the following new subparagraph:
                    ``(C) Exception for projects with respect to which 
                affordable housing credit is allowed.--In the case of a 
                project with respect to which credit is allowed under 
                section 42, the second sentence of subparagraph (B) 
                shall be applied by substituting `building (within the 
                meaning of section 42)' for `project'.''.
    (b) Students.--Paragraph (2) of section 142(d) (relating to 
definitions and special rules) is amended by adding at the end the 
following new subparagraph:
                    ``(C) Students.--Students (as defined in section 
                152(f)(2)) shall not be treated as satisfying the 
                requirements of subparagraph (A) or (B) of paragraph 
                (1) except under rules similar to the rules of 
                42(i)(3)(D).''.
    (c) Single-Room Occupancy Units.--Paragraph (2) of section 142(d) 
(relating to definitions and special rules), as amended by this Act, is 
further amended by adding at the end the following new subparagraph:
                    ``(D) Single-room occupancy units.--A unit shall 
                not fail to be treated as a residential unit merely 
                because such unit is a single-room occupancy unit 
                (within the meaning of section 42).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to determinations of the status of qualified residential rental 
projects for periods beginning after the date of the enactment of this 
Act, with respect to bonds issued before, on, or after such date.

          TITLE VII--IMPROVE THE MORTGAGE REVENUE BOND PROGRAM

SEC. 701. SPECIAL RULE FOR USE OF MORTGAGE BONDS FOR DISASTER VICTIMS, 
              SINGLE PARENTS, AND HOMEMAKERS.

    (a) In General.--Paragraph (2) of section 143(d) (relating to 
exceptions to 3-year requirement) is amended by striking ``and'' at the 
end of subparagraph (C) and by inserting after subparagraph (D) the 
following new subparagraphs:
                    ``(E) financing of residences for individuals with 
                an ownership interest in a principal residence which--
                            ``(i) is located in an area with respect to 
                        which a major disaster has been declared by the 
                        President under section 401 of the Robert T. 
                        Stafford Disaster Relief and Emergency 
                        Assistance Act, and
                            ``(ii) has been rendered uninhabitable by 
                        reason of the major disaster,
                    ``(F) financing of residences for individuals who--
                            ``(i) are not married, and
                            ``(ii) have one or more qualifying children 
                        (within the meaning of section 152), and
                    ``(G) financing of residences for displaced 
                homemakers,''.
    (b) Displaced Homemakers.--Section 143(d) is amended by adding at 
the end the following new paragraph:
            ``(4) Displaced homemaker.--For purposes of paragraph 
        (2)(G), the term `displaced homemaker' means any individual who 
        is--
                    ``(A) over 18 years of age,
                    ``(B) is not employed or underemployed and is 
                experiencing difficulty in obtaining or upgrading 
                employment, and
                    ``(C) has not worked full-time full-year in the 
                labor force for a number of years before the date on 
                which financing for a residence is supplied, but has, 
                during such years, worked primarily without 
                remuneration to care for the home and family.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 702. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL REPAYMENTS ON 
              QUALIFIED MORTGAGE ISSUES TO REDEEM BONDS.

    (a) In General.--Subparagraph (A) of section 143(a)(2) (relating to 
qualified mortgage issue defined) is amended by inserting ``and'' at 
the end of clause (ii), by striking ``, and'' at the end of clause 
(iii) and inserting a period, and by striking clause (iv) and the last 
sentence.
    (b) Conforming Amendment.--Clause (ii) of section 143(a)(2)(D) is 
amended by striking ``(and clause (iv) of subparagraph (A))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to repayments received after the date of the enactment of this 
Act.

                       TITLE VIII--EFFECTIVE DATE

SEC. 801. EFFECTIVE DATE.

    Except as otherwise provided in this Act, the amendments made by 
this Act shall apply to--
            (1) housing credit dollar amounts allocated after the date 
        of the enactment of this Act, and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to such building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.
                                 <all>