[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6562 Introduced in House (IH)]
111th CONGRESS
2d Session
H. R. 6562
To revitalize home ownership by establishing a shared equity
appreciation homeownership pilot program.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 21, 2010
Ms. Corrine Brown of Florida 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 determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To revitalize home ownership by establishing a shared equity
appreciation homeownership pilot program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Residential Housing
Recovery Act of 2010''.
SEC. 2. DECLARATION OF PURPOSE.
The Congress hereby declares that a national emergency exists that
is producing widespread disruption of the owned residential real estate
markets, which burdens interstate and foreign commerce, affects the
public welfare, and undermines the standard of living of the American
people. The Congress hereby declares a national policy to remove
obstructions to the free flow of interstate and foreign commerce in the
owned residential housing sector of the American economy; and to
provide for the general welfare by promoting the flow of equity capital
into the residential housing sector through innovative methods,
including the use of shared equity appreciation financing methods.
SEC. 3. SHARED EQUITY APPRECIATION PILOT PROGRAM.
(a) Establishment.--The Secretary of the Treasury (in this section
referred to as the ``Secretary'') shall carry out a shared equity
appreciation financing pilot program under this section to analyze the
effectiveness, including as a step in the economic recovery of the
United States, of shared equity finance methods that stimulate the flow
of private equity capital into the housing sector, while mitigating
risk to borrowers.
(b) Structure.--Under the pilot program under this section, the
Secretary shall--
(1) provide for entities, individuals, and governmental
agencies to assist homeowners to acquire, refinance, or
maintain ownership of 1- to 4-family residences with funding
provided through shared equity appreciation arrangements under
which private or public sector investors, or both, invest
equity funds for such residences and thereby share in the
equity appreciation of such residences;
(2) encourage public and private sector investment in such
shared equity appreciation arrangements through--
(A) provision of upfront financial assistance to
participants in the pilot program, including payments
for administrative expenses and operating capital;
(B) insurance under subsection (h) of risks of loss
to private investors in such arrangements;
(C) direct investment by public investors in
contracts for such arrangements; and
(D) tax credits to private investors in such
arrangements under section 45S of the Internal Revenue
Code of 1986 (as added by subsection (g)); and
(3) evaluate the effectiveness of whether the actions taken
by the Secretary under the pilot program pursuant to paragraph
(2) encourage investment in shared equity appreciation
arrangements.
(c) Application and Selection.--
(1) Eligibility and applications.--The Secretary shall
establish eligibility requirements for financial institutions,
nonprofit organizations, housing associations, investment
pools, and other appropriate public and private capital sources
and individuals to participate in the pilot program under this
section and originate agreements for shared equity appreciation
arrangements under the program, and shall provide for eligible
entities and individuals to apply to the Secretary for such
participation. Such applications shall include such information
as the Secretary considers appropriate.
(2) Selection; criteria.--Not later than 180 days after the
date of the enactment of this Act, the Secretary shall select
participants in the pilot program, from among persons applying
for such participation, using criteria established by the
Secretary, which shall include--
(A) whether, under the pilot program, the
applicant--
(i) can provide relief to homeowners
without modifying the original mortgage and
securitization;
(ii) can provide homeowners with a long-
term stimulus for as long as the shared equity
arrangement is in effect;
(iii) will empower homeowners to have a
stake in the solution;
(iv) has a streamlined process for
originating and servicing contracts under the
pilot program for shared equity appreciation
arrangements;
(v) can materially reduce default and
foreclosure risk on mortgages of homeowners;
(vi) can effectively reduce interest rates
on mortgages of homeowners;
(vii) can effectively reduce debt-to-income
ratios and re-default rates on mortgages of
homeowners;
(viii) will credit homeowners with 100
percent of the increase in the value of
homeowners' residences resulting from
improvements made to their properties;
(ix) will provide periodic payments based
on current home value to the homeowners or to
the homeowners' lenders on behalf of the
homeowner;
(x) will make equity-sharing payments
available to new home purchasers to increase
the percentage of approved loan applications;
and
(xi) will make equity-sharing payments
available to senior homeowners to reduce the
rate of forced sales of their properties;
(B) whether investors in mortgage-backed securities
deem equity-sharing payments to homeowners under the
applicant's program as an incentive to providing
principal forbearance;
(C) whether mortgage loan servicers deem equity-
sharing payments to homeowners under the applicant's
program as a suitable loss mitigation tool;
(D) whether institutions regulated under the
Community Reinvestment Act of 1977 (12 U.S.C. 2901) and
the Federal financial supervisory agencies deem equity-
sharing payments to homeowners as an investment
eligible for credit under such Act; and
(E) whether providing Government-sponsored
insurance against loss in property value under the
applicant's program will increase participation by
private investors.
(d) Limitation to Principal Residence.--Only mortgages for
residences that are occupied as the principal residence of the
mortgagee shall be eligible under the pilot program under this section.
(e) Rights of Parties.--The Secretary shall establish the rights,
privileges and responsibilities of the respective parties to
transactions under the pilot program under this section.
(f) Geographic Diversity.--The Secretary shall carry out the pilot
program on a regional basis in five regional areas of the United
States, as follows:
(1) Northeast.--The Northeast region, consisting of the
States of Connecticut, Delaware, Maine, Maryland,
Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Rhode Island and Vermont.
(2) Southeast.--The Southeast region, consisting of the
States of Alabama, Florida, Georgia, Mississippi, North
Carolina, South Carolina, Tennessee, Virginia, and West
Virginia, and the District of Columbia.
(3) Central.--The Central region, consisting of the States
of Arkansas, Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Michigan, Missouri, Nebraska, Ohio, and Wisconsin.
(4) Southwest.--The Southwest region, consisting of the
States of Arizona, California, Colorado, Hawaii, Nevada, New
Mexico, Oklahoma, and Texas.
(5) Northwest.--The Northwest region, consisting of the
States of Alaska, Idaho, Minnesota, Montana, North Dakota,
Oregon, South Dakota, Utah, Washington, and Wyoming.
(g) Tax Credit for Private Investment in Shared Equity Appreciation
Contracts.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new section:
``SEC. 45S. CREDIT FOR PRIVATE INVESTMENT IN SHARED EQUITY APPRECIATION
CONTRACTS.
``For purposes of section 38, the shared equity appreciation
contract credit determined under this section for the taxable year is
39 percent of the aggregate amount paid or incurred by the taxpayer
during such taxable year as an investment in any shared appreciation
contract of a participant in the pilot program under the American
Residential Housing Recovery Act of 2010.''.
(2) Credit to be part of general business credit.--
Subsection (b) of section 38 of such Code is amended by
striking ``plus'' at the end of paragraph (35), by striking the
period at the end of paragraph (36) and inserting ``, plus'' ,
and by adding at the end the following new paragraph:
``(37) the shared equity appreciation contract credit
determined under section 45S(a).''.
(3) Clerical amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new item:
``Sec. 45S. Credit for private investment in shared equity appreciation
contracts.''.
(4) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after the date of the
enactment of this Act.
(h) Insurance of Risks to Investors.--From any amounts made
available for carrying out the pilot program under this section, the
Secretary shall set aside amounts sufficient to insure investments of
private funds in shared equity appreciation arrangements fully against
any losses arising from participation in the pilot program.
(i) Monitoring and Reporting.--
(1) Monitoring.--The Secretary shall provide for such
monitoring under the pilot program under this section as may be
necessary and appropriate to determine its effectiveness, and
the structure and requirements of such monitoring.
(2) Reports to congress.--Not later than the expiration of
the 18-month period beginning on the date of the enactment of
this Act, the Comptroller General of the United States shall
submit a report to the Congress analyzing effectiveness of the
pilot program under this section and making recommendations
regarding expansion or improvements thereof.
(j) Waiver.--The Secretary may waive, or specify alternative
requirements for, any provision of any statute, regulation, or
guideline that the Secretary administers upon a determination by the
Secretary that such waiver is appropriate to carry out the pilot
program under this section.
(k) Authorization of Appropriations.--There is authorized to be
appropriated for assistance under the pilot program under this section
and any costs of carrying out this section such sums as may be
necessary for each of fiscal years 2010 through 2015.
SEC. 4. REGULATORY OVERSIGHT OF SHARED EQUITY APPRECIATION CONTRACTS BY
BUREAU OF CONSUMER FINANCIAL PROTECTION.
(a) Treatment as Consumer Financial Product.--Section 1002 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C.
5481) is amended--
(1) in paragraph (5)--
(A) in subparagraph (A), by striking ``or'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``or''; and
(C) by adding at the end the following new
subparagraph:
``(C) is a shared equity appreciation contract'';
(2) by redesignating paragraphs (27) through (29) as
paragraphs (28) through (30), respectively; and
(3) by inserting after paragraph (26) the following new
paragraph:
``(27) Shared equity appreciation contract.--The term
`shared equity appreciation contract' means an agreement
between private or public sector investors, or both, and
homeowners under which such investors provide funds to assist
the homeowners to acquire, refinance, or maintain ownership of
1- to 4-family residences and under which the investors share
in the equity appreciation of such residence.''.
(b) Oversight.--Subtitle C of title X of the Dodd-Frank Wall Street
Reform and Consumer Protection Act is amended--
(1) by redesignating section 1037 (12 U.S.C. 5531 note) as
section 1038; and
(2) by inserting after section 1036 (12 U.S.C. 5536) the
following new section:
``SEC. 1037. SHARED EQUITY APPRECIATION CONTRACTS.
``In carrying out its duties under this title with respect to
shared equity appreciation contracts, the Bureau shall issue and
enforce regulations governing the establishment and servicing of shared
appreciation contracts to ensure that--
``(1) consumers receive clear and balanced information
about the risks and benefits of shared equity appreciation
financing, including information about available alternatives;
``(2) appropriate eligibility and underwriting guidelines
are applied;
``(3) consumers demonstrate they understand their rights
and obligations, as well as the risks and benefits, before
entering into shared equity appreciation contracts;
``(4) consumers receive qualified independent counseling
before entering into shared equity appreciation contracts;
``(5) the terms of such contracts, including pricing,
homeowner payments and percentage of equity shared, are not
predatory;
``(6) consumers are protected from being sold shared equity
contracts to fund inappropriate annuities, investments, and
other financial products,
``(7) contract portfolio and individual loan level audit
review standards are established and followed; and
``(8) shared equity appreciation contract providers are
certified for financial strength, comply with rules and
regulations promulgated by the Bureau, and follow procurement
policies consistent with public sector practice.''.
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