[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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