[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 906 Introduced in House (IH)]

111th CONGRESS
  1st Session
                                H. R. 906

             To provide incentives for affordable housing.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 4, 2009

Mrs. Tauscher (for herself, Mr. Cardoza, Ms. Zoe Lofgren of California, 
Ms. Berkley, and Mr. Hinchey) 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 provide incentives for affordable housing.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Housing Disaster 
Area Foreclosure Prevention Act of 2009''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title and table of contents.
      TITLE I--EXPANSION OF STATE FORECLOSURE MITIGATION PROGRAMS

Sec. 101. Stabilization of the mortgage revenue bond market.
Sec. 102. TARP assistance for refinancing underwater mortgages.
Sec. 103. Interest rate buy-down for refinancing mortgages and new 
                            mortgages for homes in areas served by 
                            State housing finance agency foreclosure 
                            prevention programs.
Sec. 104. HUD action to increase access to mortgage insurance by State 
                            housing finance agencies.
Sec. 105. State reports on use of refinancing bond authority.
                    TITLE II--HOUSING TAX INCENTIVES

Sec. 201. Temporary increase in volume cap for housing bonds issued for 
                            areas most affected by foreclosure crisis.
Sec. 202. Extension of time for using increased volume cap for housing 
                            bonds.
Sec. 203. Expansion of use of mortgage revenue bonds for mortgage 
                            refinancing loans.
Sec. 204. Alternative minimum tax limitations not applicable to 
                            refinancings of tax-exempt housing bonds.
Sec. 205. Clarification of applicability to high foreclosure impact 
                            areas.

      TITLE I--EXPANSION OF STATE FORECLOSURE MITIGATION PROGRAMS

SEC. 101. STABILIZATION OF THE MORTGAGE REVENUE BOND MARKET.

    The Secretary of the Treasury shall take all necessary steps to 
support the mortgage revenue bond market, including the use of amounts 
made available under title I of the Emergency Economic Stabilization 
Act of 2008 to purchase mortgage revenue bonds (as defined in section 
143 of the Internal Revenue Code of 1986) at a rate of interest that 
makes the housing programs carried out with the proceeds of such bonds 
economically feasible.

SEC. 102. TARP ASSISTANCE FOR REFINANCING UNDERWATER MORTGAGES.

    (a) Authority.--The Secretary of the Treasury shall carry out a 
program to use amounts specified in subsection (e) to reduce the 
outstanding debt on qualifying existing underwater mortgages in 
connection with the refinancing of such mortgages.
    (b) Qualifying Existing Underwater Mortgages.--For purposes of this 
section, the term ``qualifying existing underwater mortgage'' means a 
mortgage or mortgages on a 1- to 4-family owner-occupied residential 
property that has an appraised value that is less than the outstanding 
obligation under such mortgage or mortgages.
    (c) Terms of Refinancing Mortgage.--The Secretary may use amounts 
under the program under this section only with respect to qualifying 
existing underwater mortgages that are refinanced under a mortgage that 
is eligible to be financed with the proceeds of a mortgage revenue bond 
pursuant to section 143(k)(12) of the Internal Revenue Code of 1986.
    (d) Recapture of Assistance Amounts.--In making assistance 
available under the program under this section with respect to a 
qualifying existing underwater mortgage, the Secretary shall take such 
actions and enter into such binding agreements as are necessary to 
provide for recovery by the Secretary, upon any sale of the residential 
property subsequent to the refinancing of the mortgage under such 
program, of the lesser of--
            (1) an amount equal to 50 percent of any proceeds of the 
        sale in excess of the amount necessary to fully pay any 
        outstanding obligations, including interest, under the 
        refinanced mortgage; or
            (2) the amount of assistance provided under the program 
        with respect to such mortgage.
    (e) Use of TARP Amounts.--Of any amounts made available under title 
I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 
et seq.), the Secretary of the Treasury shall reserve for use only 
under the program under this section, and shall use only under such 
program, amounts sufficient to provide assistance under the program in 
connection with any mortgage refinanced with the proceeds of a mortgage 
revenue bond pursuant to section 143(k)(12) of the Internal Revenue 
Code of 1986.

SEC. 103. INTEREST RATE BUY-DOWN FOR REFINANCING MORTGAGES AND NEW 
              MORTGAGES FOR HOMES IN AREAS SERVED BY STATE HOUSING 
              FINANCE AGENCY FORECLOSURE PREVENTION PROGRAMS.

    (a) Authority.--The Federal National Mortgage Association and the 
Federal Home Loan Mortgage Corporation shall each carry out a program 
under this section to purchase and securitize qualified refinancing 
mortgages and qualified new mortgages on single-family housing, in 
accordance with this section and policies and procedures that the 
Director of the Federal Housing Finance Agency shall establish.
    (b) Purchase of Qualified Mortgages.--
            (1) Requirement to purchase.--If a lender proffers to an 
        enterprise, in accordance with requirements established by the 
        Director, a mortgage or mortgages for purchase under this 
        section, the enterprise shall make a determination of whether 
        such mortgage or mortgages are qualified mortgages. Subject to 
        subsection (h), if the enterprise determines that such mortgage 
        or mortgages meet the requirements for qualified mortgages, the 
        enterprise shall make a commitment to purchase, and shall 
        purchase, the mortgage or mortgages.
            (2) Advance commitments.--The Director shall require each 
        enterprise to establish a procedure for approval of lenders to 
        receive commitments, in advance of the origination of qualified 
        mortgages, for purchase of such mortgages under this section by 
        the enterprise.
    (c) Qualified Mortgages.--
            (1) Qualified mortgage.--For purposes of this section, the 
        term ``qualified mortgage'' means a mortgage that is a 
        qualified refinancing mortgage or a qualified new mortgage.
            (2) Qualified refinancing mortgage.--For purposes of this 
        section, the term ``qualified refinancing mortgage'' means a 
        mortgage that meets the following requirements:
                    (A) Single-family housing in housing distress areas 
                served by state housing finance agency foreclosure 
                reduction programs.--The property subject to the 
                mortgage shall be a residence as defined in section 143 
                of the Internal Revenue Code of 1986 that is located 
                within a qualified census tract or area of chronic 
                economic distress (within the meaning given such terms 
                in section 143(j) of such Code) that is located within 
                a foreclosure crisis State (as such term is defined in 
                section 146(d)(6) of such Code).
                    (B) Principal residence.--The mortgagor under the 
                mortgage shall satisfy the requirement in section 
                143(c)(1) of the Internal Revenue Code of 1986.
                    (C) Refinancing.--The principal loan amount 
                repayment of which is secured by the mortgage shall be 
                used to satisfy all indebtedness under an existing 
                first mortgage that--
                            (i) was made for purchase of, or 
                        refinancing another first mortgage on, the same 
                        property that is subject to the qualified 
                        refinancing mortgage; and
                            (ii) was originated on or before January 1, 
                        2008.
                    (D) Interest rate; term to maturity.--The mortgage 
                shall--
                            (i) bear interest at a single annual rate 
                        that is fixed for the entire term of the 
                        mortgage, which shall not exceed the annual 
                        rate that is 100 basis points less than the 
                        prevailing annual interest rate for mortgages 
                        of similar type and term to maturity, as 
                        determined by the Director; and
                            (ii) have a term to maturity of not less 
                        than 30 years and not more than 40 years from 
                        the date of the beginning of the amortization 
                        of the mortgage.
                    (E) Underwriting standards.--The mortgage shall 
                meet such underwriting standards as the Director shall 
                require.
                    (F) Waiver of prepayment penalties.--All penalties 
                for prepayment or refinancing of the underlying 
                mortgage refinanced by the mortgage, and all fees and 
                penalties related to the default or delinquency on such 
                mortgage, shall have been waived or forgiven.
            (3) Qualified new mortgage.--For purposes of this section, 
        the term ``qualified new mortgage'' means a mortgage that meets 
        the following requirements:
                    (A) Terms.--The mortgage meets the requirements 
                under subparagraphs (A), (B), (D), and (E) of paragraph 
                (2).
                    (B) Home purchase.--The principal loan amount 
                repayment of which is secured by the mortgage shall be 
                used to purchase the property that is subject to the 
                qualified new mortgage.
                    (C) New mortgages.--The mortgage was originated on 
                or after the date of the enactment of this Act.
    (d) Exceptions to Underwriting Standards.--Each enterprise shall 
establish such exceptions to the underwriting standards of the 
enterprise, including downpayment and credit rating standards, that 
conform to the underwriting standards established pursuant to 
subsection (c)(2)(E), as may be necessary to allow the enterprise to 
purchase and securitize qualified refinancing mortgages and qualified 
new mortgages under this section, in accordance with such requirements 
as the Director shall establish.
    (e) Securitization.--
            (1) Requirement.--Each enterprise shall, upon such terms 
        and conditions as it may prescribe, set aside any qualified 
        mortgages purchased by it under this section and, upon approval 
        of the Secretary of the Treasury, issue and sell securities 
        based upon such mortgages set aside.
            (2) Form.--Securities issued under this subsection may be 
        in the form of debt obligations or trust certificates of 
        beneficial interest, or both.
            (3) Terms.--Securities issued under this subsection shall 
        have such maturities and bear such rate or rates of interest as 
        may be determined by the enterprise with the approval of the 
        Secretary.
            (4) Exemption.--Securities issued by an enterprise under 
        this subsection shall, to the same extent as securities which 
        are direct obligations of or obligations guaranteed as to 
        principal and interest by the United States, be deemed to be 
        exempt securities within the meaning of laws administered by 
        the Securities and Exchange Commission.
            (5) Principal and interest payments.--Mortgages set aside 
        pursuant to this subsection shall at all times be adequate to 
        enable the issuing enterprise to make timely principal and 
        interest payments on the securities issued and sold pursuant to 
        this subsection.
            (6) Required disclosure.--Each enterprise shall insert 
        appropriate language in all of the securities issued under this 
        subsection clearly indicating that such securities, together 
        with the interest thereon, are not guaranteed by the United 
        States and do not constitute a debt or obligation of the United 
        States or any agency or instrumentality thereof other than the 
        enterprise.
    (f) Federal Reserve Financing Facility.--The Secretary of the 
Treasury shall establish a credit facility of the Federal Reserve 
System to make credit available to the enterprises at interest rates 
comparable to rates on securities issued by the Secretary of the 
Treasury under chapter 31 of title 31, United States Code, and having 
comparable terms, as determined by the Board.
    (g) Definitions.--For purposes of this Act, the following 
definitions shall apply:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (2) Enterprise.--The term ``enterprise'' means the Federal 
        National Mortgage Association and the Federal Home Loan 
        Mortgage Corporation.
            (3) Secretary.--The term ``Secretary'' means the Secretary 
        of the Treasury.
    (h) Termination.--The requirement under subsection (b)(1) for the 
enterprises to purchase mortgages shall not apply to any mortgage 
proffered to an enterprise after December 31, 2010.

SEC. 104. HUD ACTION TO INCREASE ACCESS TO MORTGAGE INSURANCE BY STATE 
              HOUSING FINANCE AGENCIES.

    The Secretary of Housing and Urban Development shall take all 
necessary actions, in consultation and coordination with State housing 
finance agencies, to increase access by such agencies to mortgage 
insurance for the purpose of making such insurance available in 
connection with mortgages financed by bonds issued by such agencies 
pursuant to this Act and the amendments made by this Act.

SEC. 105. STATE REPORTS ON USE OF REFINANCING BOND AUTHORITY.

    Not later than the expiration of the 6-month period beginning upon 
the date of the enactment of this Act and every six months thereafter 
until the refinancing bond authority provided by the amendments made by 
title II of this Act has been exhausted, each State using the 
refinancing authority provided by the amendments made by section 3021 
of the Housing and Economic Recovery Act of 2008 (Public Law 110-289; 
122 Stat. 2892) shall submit a report to the Congress specifying--
            (1) the amount of the refinancing bond authority provided 
        for the State under the amendments made by such section 3021 
        and title II of this Act that remains;
            (2) the number of homes that have been refinanced using 
        such refinancing authority of the State; and
            (3) the counties and municipalities in the State in which 
        homes are located that are subject to mortgages refinanced 
        using such refinancing authority and the amount of such 
        authority used with respect to each such county and 
        municipality.

                    TITLE II--HOUSING TAX INCENTIVES

SEC. 201. TEMPORARY INCREASE IN VOLUME CAP FOR HOUSING BONDS ISSUED FOR 
              AREAS MOST AFFECTED BY FORECLOSURE CRISIS.

    (a) 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:
            ``(6) Increase and set aside for housing bonds for 2009.--
                    ``(A) Increase of 2009.--In the case of calendar 
                year 2009, the State ceiling for each foreclosure 
                crisis State shall be increased by the sum of--
                            ``(i) an amount equal to $10,000,000,000 
                        multiplied by a fraction--
                                    ``(I) the numerator of which is the 
                                number of foreclosures in such State, 
                                and
                                    ``(II) the denominator of which is 
                                the aggregate number of foreclosures in 
                                all foreclosure crisis States, plus
                            ``(ii) an amount equal to $10,000,000,000 
                        multiplied by a fraction--
                                    ``(I) the numerator of which is the 
                                number of single family residences in 
                                such State with mortgages that are more 
                                than 30 days past due, and
                                    ``(II) the denominator of which is 
                                the aggregate number of single family 
                                residences in all foreclosure crisis 
                                States with mortgages that more than 30 
                                days past due.
                    ``(B) Set aside.--Any amount of the State ceiling 
                for any foreclosure crisis State which is attributable 
                to an increase under this paragraph shall be allocated 
                solely for one or more qualified housing issues (as 
                defined in paragraph (5)). The State shall ensure that 
                such issues (to the extent attributable to an increase 
                under this paragraph) are used to finance housing in 
                the counties and municipalities of the State which 
                experience the highest number of foreclosures, or have 
                the highest number of residences with mortgages that 
                are more than 30 days past due, per capita.
                    ``(C) Foreclosure crisis state.--For purposes of 
                this paragraph, the term `foreclosure crisis State' 
                means the 10 States determined by the Secretary as 
                having been the most impacted by the foreclosure 
                crisis. In making such determination the Secretary 
                shall take into account the rate of foreclosures in the 
                States, the rate of single family residences in the 
                States with mortgages that are more than 30 days past 
                due, and such other factors as the Secretary determines 
                appropriate.''.
    (b) Carryforward of Unused Limitations.--Paragraph (6) of section 
146(f) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``subsection (d)(5)'' in the text preceding 
        subparagraph (A) and inserting ``paragraph (5) or (6) of 
        subsection (d)'', and
            (2) by striking ``increased volume cap under subsection 
        (d)(5)'' in the heading thereof and inserting ``temporary 
        increased volume cap''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 202. EXTENSION OF TIME FOR USING INCREASED VOLUME CAP FOR HOUSING 
              BONDS.

    (a) In General.--Subparagraph (B) of section 146(f)(6) of the 
Internal Revenue Code of 1986 is amended by striking ``2010'' and 
inserting ``2011''.
    (b) Report.--Not later than December 31, 2010, the Secretary of the 
Treasury shall submit a written report to Congress regarding whether or 
not, considering the stability of the housing markets, the 
liberalization of the tax-exempt housing bond rules included in 
sections 146(d)(5), 146(d)(6), and 143(k)(12) of the Internal Revenue 
Code of 1986 should be extended beyond December 31, 2011.

SEC. 203. EXPANSION OF USE OF MORTGAGE REVENUE BONDS FOR MORTGAGE 
              REFINANCING LOANS.

    (a) In General.--Subparagraph (C) of section 143(k)(12) of the 
Internal Revenue Code of 1986 is amended by striking ``adjustable 
rate''.
    (b) Extension of Program.--Subparagraph (D) of section 143(k)(12) 
of such Code is amended by striking ``December 31, 2010'' and inserting 
``December 31, 2011''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 204. ALTERNATIVE MINIMUM TAX LIMITATIONS NOT APPLICABLE TO 
              REFINANCINGS OF TAX-EXEMPT HOUSING BONDS.

    (a) In General.--Clause (iii) of section 57(a)(5)(C) of the 
Internal Revenue Code of 1986 is amended by striking the last sentence 
thereof.
    (b) Effective Date.--The amendment made by this section shall apply 
to refunding bonds issued after the date of the enactment of this Act.

SEC. 205. CLARIFICATION OF APPLICABILITY TO HIGH FORECLOSURE IMPACT 
              AREAS.

    (a) In General.--Subsection (j) of section 143 of the Internal 
Revenue Code of 1986 is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A), by striking ``or'',
                    (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) a high foreclosure area.''; and
            (2) by adding at the end the following new paragraph:
            ``(4) High foreclosure area.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the term `high foreclosure area' means an area for 
                which the rate of--
                            ``(i) foreclosures on mortgages on 
                        residences occurring during the preceding 12 
                        months, and
                            ``(ii) notices provided to mortgagors 
                        during the preceding calendar quarter, 
                        specifying that payment of amounts due under a 
                        mortgage on a residence is at least 30 days 
                        past due,
                exceeds 150 percent of the national rate.
                    ``(B) Date used.--The determination under 
                subparagraph (A) shall be made on the basis of the best 
                data available to a State on a quarterly basis.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.
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