[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[S. 3224 Introduced in Senate (IS)]

112th CONGRESS
  2d Session
                                S. 3224

  To amend the Internal Revenue Code of 1986 to prevent an unfair tax 
 burden for veterans and homeowners who have received assistance from 
       the National Mortgage Settlement, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 23, 2012

 Ms. Stabenow 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 prevent an unfair tax 
 burden for veterans and homeowners who have received assistance from 
       the National Mortgage Settlement, 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 ``Homeowners and Military Families Tax 
Fairness Act''.

SEC. 2. EXTENSION OF INCOME EXCLUSION FOR DISCHARGE OF QUALIFIED 
              PRINCIPAL RESIDENCE INDEBTEDNESS.

    (a) In General.--Subparagraph (E) of section 108(a)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``January 1, 
2013'' and inserting ``January 1, 2016''.
    (b) Application to Certain Agreements.--Subparagraph (E) of section 
108(a)(1) of the Internal Revenue Code of 1986, as amended by 
subsection (a), is amended by inserting before the period the 
following: ``, or which is discharged after such date pursuant to an 
agreement entered into before such date under the programs created 
pursuant to, or using funds authorized by the Emergency Economic 
Stabilization Act of 2008''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to discharges in taxable years beginning after 
        December 31, 2012.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

SEC. 3. EXTENSION OF DEDUCTION FOR MORTGAGE INSURANCE PREMIUMS.

    (a) In General.--Subclause (I) of section 163(h)(3)(E)(i) of the 
Internal Revenue Code of 1986 is amended by striking ``December 31, 
2011'' and inserting ``December 31, 2012''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or accrued after December 31, 2011.

SEC. 4. EXCLUSIONS RELATING TO NATIONAL MORTGAGE SETTLEMENT PAYMENTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139D the following new section:

``SEC. 139E. NATIONAL MORTGAGE SETTLEMENT.

    ``(a) General Rule.--In the case of an individual, gross income 
shall not include any National Mortgage Settlement amount.
    ``(b) National Mortgage Settlement Amount Defined.--For purposes of 
subsection (a), the term `National Mortgage Settlement amount' means, 
with respect to any amount received under the National Mortgage 
Settlement, an amount which is--
            ``(1) a payment for transitional assistance,
            ``(2) a payment from the Borrower Payment Fund under the 
        National Mortgage Settlement to a borrower whose home was 
        finally sold or taken in foreclosure after December 31, 2007, 
        and before January 1, 2012, and
            ``(3) a payment received as a result of a foreclosure that 
        the Attorney General of the United States has determined was 
        not in compliance with the Servicemembers Civil Relief Act.
    ``(c) Disregard of Refund of Excess Mortgage Interest and Related 
Damages.--In the case of an individual, the amount of interest refunded 
and damages paid for excess charges of mortgage interest under the 
National Mortgage Settlement with respect to a wrongful foreclosure 
described in subsection (b)(3)--
            ``(1) shall be disregarded for purposes of this chapter, 
        and
            ``(2) no adjustment of the deduction allowable under 
        section 163(h) shall be made as a result of such refund.
    ``(d) National Mortgage Settlement.--For purposes of this section, 
the term `National Mortgage Settlement' means any consent agreement 
entered into in settlement of the action entitled `The United States of 
America, et al. against Bank of America Corporation, et al.', filed in 
the United States District Court for the District of Columbia on March 
12, 2012 (case numbered 1:12-cv-00361-RMC).''.
    (b) Denial of Business Deduction for Certain Payments.--Section 162 
of the Internal Revenue Code of 1986 is amended by redesignating 
subsection (q) as subsection (r) and by inserting after subsection (p) 
the following new subsection:
    ``(q) National Mortgage Settlement.--
            ``(1) In general.--No deduction shall be allowed under this 
        chapter for any National Mortgage Settlement amount that was 
        paid in exchange for a full release of the United States' 
        potential civil claims under the Servicemembers Civil Relief 
        Act.
            ``(2) National mortgage settlement amount.--The term 
        `National Mortgage Settlement amount' has the meaning given 
        such term by section 139E.''.
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 139D the 
following new item:

``Sec. 139E. National Mortgage settlement.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after March 12, 2012.
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