[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 376 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 376

To provide rules for the modification or disposition of certain assets 
 by real estate mortgage investment conduits pursuant to division A of 
    the Emergency Economic Stabilization Act of 2008, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 4, 2009

Mr. Reed (for himself, Mr. Dodd, Mr. Kerry, Mr. Schumer, Ms. Stabenow, 
 and Mr. Kennedy) introduced the following bill; which was read twice 
  and referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To provide rules for the modification or disposition of certain assets 
 by real estate mortgage investment conduits pursuant to division A of 
    the Emergency Economic Stabilization Act of 2008, 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.

    This Act may be cited as the ``Real Estate Mortgage Investment 
Conduit Improvement Act of 2009''.

SEC. 2. SPECIAL RULES FOR MODIFICATION OR DISPOSITION OF QUALIFIED 
              MORTGAGES OR FORECLOSURE PROPERTY BY REAL ESTATE MORTGAGE 
              INVESTMENT CONDUITS.

    (a) In General.--If a REMIC (as defined in section 860D(a) of the 
Internal Revenue Code of 1986) modifies or disposes of a troubled asset 
under the Troubled Asset Relief Program established by the Secretary of 
the Treasury under section 101(a) of the Emergency Economic 
Stabilization Act of 2008 or under rules established by the Secretary 
under section 3 of this Act--
            (1) such modification or disposition shall not be treated 
        as a prohibited transaction under section 860F(a)(2) of such 
        Code, and
            (2) for purposes of part IV of subchapter M of chapter 1 of 
        such Code--
                    (A) an interest in the REMIC shall not fail to be 
                treated as a regular interest (as defined in section 
                860G(a)(1) of such Code) solely because of such 
                modification or disposition, and
                    (B) any proceeds resulting from such modification 
                or disposition shall be treated as amounts received 
                under qualified mortgages.
    (b) Termination of REMIC.--For purposes of the Internal Revenue 
Code of 1986, an entity which is a REMIC (as defined in section 860D(a) 
of the Internal Revenue Code of 1986) shall cease to be a REMIC if the 
instruments governing the conduct of servicers or trustees with respect 
to qualified mortgages (as defined in section 860G(a)(3) of such Code) 
or foreclosure property (as defined in section 860G(a)(8) of such 
Code)--
            (1) prohibit or restrict (including restrictions on the 
        type, number, percentage, or frequency of modifications or 
        dispositions) such servicers or trustees from reasonably 
        modifying or disposing of such qualified mortgages or such 
        foreclosure property in order to participate in the Troubled 
        Asset Relief Program established by the Secretary of the 
        Treasury under section 101(a) of the Emergency Economic 
        Stabilization Act of 2008 or under rules established by the 
        Secretary under section 3 of this Act,
            (2) commit to a person other than the servicer or trustee 
        the authority to prevent the reasonable modification or 
        disposition of any such qualified mortgage or foreclosure 
        property,
            (3) require a servicer or trustee to purchase qualified 
        mortgages which are in default or as to which default is 
        reasonably foreseeable for the purposes of reasonably modifying 
        such mortgages or as a consequence of such reasonable 
        modification, or
            (4) fail to provide that any duty a servicer or trustee 
        owes when modifying or disposing of qualified mortgages or 
        foreclosure property shall be to the trust in the aggregate and 
        not to any individual or class of investors.
    (c) Effective Dates.--
            (1) Subsection (a).--Subsection (a) shall apply to 
        modification and dispositions after the date of the enactment 
        of this Act, in taxable years ending on or after such date.
            (2) Subsection (b).--
                    (A) In general.--Except as provided in subparagraph 
                (B), subsection (b) shall take effect on the date that 
                is 3 months after the date of the enactment of this 
                Act.
                    (B) Exception.--The Secretary of the Treasury may 
                waive the application of subsection (b) in whole or in 
                part for any period of time with respect to any entity 
                if--
                            (i) the Secretary determines that such 
                        entity is unable to comply with the 
                        requirements of such subsection in a timely 
                        manner, or
                            (ii) the Secretary determines that such 
                        waiver would further the purposes of this Act.

SEC. 3. ESTABLISHMENT OF A HOME MORTGAGE LOAN RELIEF PROGRAM UNDER THE 
              TROUBLED ASSET RELIEF PROGRAM AND RELATED AUTHORITIES.

    (a) Establishment.--Not later than 30 days after the date of 
enactment of this Act, the Secretary of the Treasury shall establish 
and implement a program under the Troubled Asset Relief Program and 
related authorities established under section 101(a) of the Emergency 
Economic Stabilization Act of 2008 (12 U.S.C. 5211(a))--
            (1) to achieve appropriate broad-scale modifications or 
        dispositions of troubled home mortgage loans; and
            (2) to achieve appropriate broad-scale dispositions of 
        foreclosure property.
    (b) Rules.--The Secretary of the Treasury shall promulgate rules 
governing the--
            (1) reasonable modification of any home mortgage loan 
        pursuant to the requirements of this Act; and
            (2) disposition of any such home mortgage loan or 
        foreclosed property pursuant to the requirements of this Act.
    (c) Considerations.--In developing the rules required under 
subsection (b), the Secretary of the Treasury shall take into 
consideration--
            (1) the debt-to-income ratio, loan-to-value ratio, or 
        payment history of the mortgagors of such home mortgage loans; 
        and
            (2) any other factors consistent with the intent to 
        streamline modifications of troubled home mortgage loans into 
        sustainable home mortgage loans.
    (d) Use of Broad Authority.--The Secretary of the Treasury shall 
use all available authorities to implement the home mortgage loan 
relief program established under this section, including, as 
appropriate--
            (1) home mortgage loan purchases;
            (2) home mortgage loan guarantees;
            (3) making and funding commitments to purchase home 
        mortgage loans or mortgage-backed securities;
            (4) buying down interest rates and principal on home 
        mortgage loans;
            (5) principal forbearance; and
            (6) developing standard home mortgage loan modification and 
        disposition protocols, which shall include ratifying that 
        servicer action taken in anticipation of any necessary changes 
        to the instruments governing the conduct of servicers or 
        trustees with respect to qualified mortgages or foreclosure 
        property are consistent with the Secretary of the Treasury's 
        standard home mortgage loan modification and disposition 
        protocols.
    (e) Payments Authorized.--The Secretary of the Treasury is 
authorized to pay servicers for home mortgage loan modifications or 
other dispositions consistent with any rules established under 
subsection (b).
    (f) Rule of Construction.--Any standard home mortgage loan 
modification and disposition protocols developed by the Secretary of 
the Treasury under this section shall be construed to constitute 
standard industry practice.
                                 <all>