[Congressional Record (Bound Edition), Volume 153 (2007), Part 27]
[House]
[Pages 35951-35955]
[From the U.S. Government Publishing Office, www.gpo.gov]




              MORTGAGE FORGIVENESS DEBT RELIEF ACT OF 2007

  Mrs. JONES of Ohio. Mr. Speaker, I move to suspend the rules and 
concur in the Senate amendment to the bill (H.R. 3648) to amend the 
Internal Revenue Code of 1986 to exclude discharges of indebtedness on 
principal residences from gross income, and for other purposes.
  The Clerk read the title of the bill.
  The text of the Senate amendment is as follows:

       Senate amendment:
       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Mortgage Forgiveness Debt 
     Relief Act of 2007''.

     SEC. 2. DISCHARGES OF INDEBTEDNESS ON PRINCIPAL RESIDENCE 
                   EXCLUDED FROM GROSS INCOME.

       (a) In General.--Paragraph (1) of section 108(a) of the 
     Internal Revenue Code of 1986 is amended by striking ``or'' 
     at the end of subparagraph (C), by striking the period at the 
     end of subparagraph (D) and inserting ``, or'', and by 
     inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) the indebtedness discharged is qualified principal 
     residence indebtedness which is discharged before January 1, 
     2010.''.
       (b) Special Rules Relating to Qualified Principal Residence 
     Indebtedness.--Section 108 of such Code is amended by adding 
     at the end the following new subsection:
       ``(h) Special Rules Relating to Qualified Principal 
     Residence Indebtedness.--
       ``(1) Basis reduction.--The amount excluded from gross 
     income by reason of subsection (a)(1)(E) shall be applied to 
     reduce (but not below zero) the basis of the principal 
     residence of the taxpayer.
       ``(2) Qualified principal residence indebtedness.--For 
     purposes of this section, the term `qualified principal 
     residence indebtedness' means acquisition indebtedness 
     (within the meaning of section 163(h)(3)(B), applied by 
     substituting `$2,000,000 ($1,000,000' for `$1,000,000 
     ($500,000' in clause (ii) thereof) with respect to the 
     principal residence of the taxpayer.
       ``(3) Exception for certain discharges not related to 
     taxpayer's financial condition.--Subsection (a)(1)(E) shall 
     not apply to the discharge of a loan if the discharge is on 
     account of services performed for the lender or any other 
     factor not directly related to a decline in the value of the 
     residence or to the financial condition of the taxpayer.
       ``(4) Ordering rule.--If any loan is discharged, in whole 
     or in part, and only a portion of such loan is qualified 
     principal residence indebtedness, subsection (a)(1)(E) shall 
     apply only to so much of the amount discharged as exceeds the 
     amount of the loan (as determined immediately before such 
     discharge) which is not qualified principal residence 
     indebtedness.
       ``(5) Principal residence.--For purposes of this 
     subsection, the term `principal residence' has the same 
     meaning as when used in section 121.''.
       (c) Coordination.--
       (1) Subparagraph (A) of section 108(a)(2) of such Code is 
     amended by striking ``and (D)'' and inserting ``(D), and 
     (E)''.
       (2) Paragraph (2) of section 108(a) of such Code is amended 
     by adding at the end the following new subparagraph:
       ``(C) Principal residence exclusion takes precedence over 
     insolvency exclusion unless elected otherwise.--Paragraph 
     (1)(B) shall not apply to a discharge to which paragraph 
     (1)(E) applies unless the taxpayer elects to apply paragraph 
     (1)(B) in lieu of paragraph (1)(E).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to discharges of indebtedness on or after January 
     1, 2007.

     SEC. 3. EXTENSION OF TREATMENT OF MORTGAGE INSURANCE PREMIUMS 
                   AS INTEREST.

       (a) In General.--Subclause (I) of section 163(h)(3)(E)(iv) 
     of the Internal Revenue Code of 1986 (relating to 
     termination) is amended by striking ``December 31, 2007'' and 
     inserting ``December 31, 2010''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to amounts paid or accrued after December 31, 
     2007.

     SEC. 4. ALTERNATIVE TESTS FOR QUALIFYING AS COOPERATIVE 
                   HOUSING CORPORATION.

       (a) In General.--Subparagraph (D) of section 216(b)(1) of 
     the Internal Revenue Code of 1986 (defining cooperative 
     housing corporation) is amended to read as follows:
       ``(D) meeting 1 or more of the following requirements for 
     the taxable year in which the taxes and interest described in 
     subsection (a) are paid or incurred:
       ``(i) 80 percent or more of the corporation's gross income 
     for such taxable year is derived from tenant-stockholders.
       ``(ii) At all times during such taxable year, 80 percent or 
     more of the total square footage of the corporation's 
     property is used or available for use by the tenant-
     stockholders for residential purposes or purposes ancillary 
     to such residential use.
       ``(iii) 90 percent or more of the expenditures of the 
     corporation paid or incurred during such taxable year are 
     paid or incurred for the acquisition, construction, 
     management, maintenance, or care of the corporation's 
     property for the benefit of the tenant-stockholders.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 5. EXCLUSION FROM INCOME FOR BENEFITS PROVIDED TO 
                   VOLUNTEER FIREFIGHTERS AND EMERGENCY MEDICAL 
                   RESPONDERS.

       (a) In General.--Part III of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to items 
     specifically excluded from gross income) is amended by 
     inserting after section 139A the following new section:

     ``SEC. 139B. BENEFITS PROVIDED TO VOLUNTEER FIREFIGHTERS AND 
                   EMERGENCY MEDICAL RESPONDERS.

       ``(a) In General.--In the case of any member of a qualified 
     volunteer emergency response organization, gross income shall 
     not include--
       ``(1) any qualified State and local tax benefit, and
       ``(2) any qualified payment.
       ``(b) Denial of Double Benefits.--In the case of any member 
     of a qualified volunteer emergency response organization--
       ``(1) the deduction under 164 shall be determined with 
     regard to any qualified State and local tax benefit, and
       ``(2) expenses paid or incurred by the taxpayer in 
     connection with the performance of services as such a member 
     shall be taken into account under section 170 only to the 
     extent such expenses exceed the amount of any qualified 
     payment excluded from gross income under subsection (a).
       ``(c) Definitions.--For purposes of this section--
       ``(1) Qualified state and local tax benefit.--The term 
     `qualified state and local tax benefit' means any reduction 
     or rebate of a tax described in paragraph (1), (2), or (3) of 
     section 164(a) provided by a State or political division 
     thereof on account of services performed as a member of a 
     qualified volunteer emergency response organization.
       ``(2) Qualified payment.--
       ``(A) In general.--The term `qualified payment' means any 
     payment (whether reimbursement or otherwise) provided by a 
     State or political division thereof on account of the 
     performance of services as a member of a qualified volunteer 
     emergency response organization.
       ``(B) Applicable dollar limitation.--The amount determined 
     under subparagraph (A) for any taxable year shall not exceed 
     $30 multiplied by the number of months during such year that 
     the taxpayer performs such services.
       ``(3) Qualified volunteer emergency response 
     organization.--The term `qualified volunteer emergency 
     response organization' means any volunteer organization--
       ``(A) which is organized and operated to provide 
     firefighting or emergency medical services for persons in the 
     State or political subdivision, as the case may be, and
       ``(B) which is required (by written agreement) by the State 
     or political subdivision to furnish firefighting or emergency 
     medical services in such State or political subdivision.
       ``(d) Termination.--This section shall not apply with 
     respect to taxable years beginning after December 31, 
     2010.''.
       (b) Clerical Amendment.--The table of sections for such 
     part is amended by inserting after the item relating to 
     section 139A the following new item:

``Sec. 139B. Benefits provided to volunteer firefighters and emergency 
              medical responders.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2007.

     SEC. 6. CLARIFICATION OF STUDENT HOUSING ELIGIBLE FOR LOW-
                   INCOME HOUSING CREDIT.

       (a) In General.--Subclause (I) of section 42(i)(3)(D)(ii) 
     of the Internal Revenue Code of 1986 (relating to certain 
     students not to disqualify unit) is amended to read as 
     follows:

       ``(I) single parents and their children and such parents 
     are not dependents (as defined in section 152, determined 
     without regard to subsections (b)(1), (b)(2), and (d)(1)(B) 
     thereof) of another individual and such children are not 
     dependents (as so defined) of another individual other than a 
     parent of such children, or.''

       (b) Effective Date.--The amendment made by this section 
     shall apply to--

[[Page 35952]]

       (1) housing credit amounts allocated before, on, or after 
     the date of the enactment of this Act, and
       (2) buildings placed in service before, on, or after such 
     date to the extent paragraph (1) of section 42(h) of the 
     Internal Revenue Code of 1986 does not apply to any building 
     by reason of paragraph (4) thereof.

     SEC. 7. APPLICATION OF JOINT RETURN LIMITATION FOR CAPITAL 
                   GAINS EXCLUSION TO CERTAIN POST-MARRIAGE SALES 
                   OF PRINCIPAL RESIDENCES BY SURVIVING SPOUSES.

       (a) Sale Within 2 Years of Spouse's Death.--Section 121(b) 
     of the Internal Revenue Code of 1986 (relating to 
     limitations) is amended by adding at the end the following 
     new paragraph:
       ``(4) Special rule for certain sales by surviving 
     spouses.--In the case of a sale or exchange of property by an 
     unmarried individual whose spouse is deceased on the date of 
     such sale, paragraph (1) shall be applied by substituting 
     `$500,000' for `$250,000' if such sale occurs not later than 
     2 years after the date of death of such spouse and the 
     requirements of paragraph (2)(A) were met immediately before 
     such date of death.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to sales or exchanges after December 31, 2007.

     SEC. 8. MODIFICATION OF PENALTY FOR FAILURE TO FILE 
                   PARTNERSHIP RETURNS; LIMITATION ON DISCLOSURE.

       (a) Extension of Time Limitation.--Section 6698(a) of the 
     Internal Revenue Code of 1986 (relating to failure to file 
     partnership returns) is amended by striking ``5 months'' and 
     inserting ``12 months''.
       (b) Increase in Penalty Amount.--Paragraph (1) of section 
     6698(b) of such Code is amended by striking ``$50'' and 
     inserting ``$85''.
       (c) Limitation on Disclosure of Taxpayer Returns to 
     Partners, S Corporation Shareholders, Trust Beneficiaries, 
     and Estate Beneficiaries.--
       (1) In general.--Section 6103(e) of such Code (relating to 
     disclosure to persons having material interest) is amended by 
     adding at the end the following new paragraph:
       ``(10) Limitation on certain disclosures under this 
     subsection.--In the case of an inspection or disclosure under 
     this subsection relating to the return of a partnership, S 
     corporation, trust, or an estate, the information inspected 
     or disclosed shall not include any supporting schedule, 
     attachment, or list which includes the taxpayer identity 
     information of a person other than the entity making the 
     return or the person conducting the inspection or to whom the 
     disclosure is made.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect on the date of the enactment of this Act.
       (d) Effective Date.--The amendments made by subsections (a) 
     and (b) shall apply to returns required to be filed after the 
     date of the enactment of this Act.

     SEC. 9. PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

       (a) In General.--Part I of subchapter B of chapter 68 of 
     the Internal Revenue Code of 1986 (relating to assessable 
     penalties) is amended by adding at the end the following new 
     section:

     ``SEC. 6699. FAILURE TO FILE S CORPORATION RETURN.

       ``(a) General Rule.--In addition to the penalty imposed by 
     section 7203 (relating to willful failure to file return, 
     supply information, or pay tax), if any S corporation 
     required to file a return under section 6037 for any taxable 
     year--
       ``(1) fails to file such return at the time prescribed 
     therefor (determined with regard to any extension of time for 
     filing), or
       ``(2) files a return which fails to show the information 
     required under section 6037,
     such S corporation shall be liable for a penalty determined 
     under subsection (b) for each month (or fraction thereof) 
     during which such failure continues (but not to exceed 12 
     months), unless it is shown that such failure is due to 
     reasonable cause.
       ``(b) Amount Per Month.--For purposes of subsection (a), 
     the amount determined under this subsection for any month is 
     the product of--
       ``(1) $85, multiplied by
       ``(2) the number of persons who were shareholders in the S 
     corporation during any part of the taxable year.
       ``(c) Assessment of Penalty.--The penalty imposed by 
     subsection (a) shall be assessed against the S corporation.
       ``(d) Deficiency Procedures Not To Apply.--Subchapter B of 
     chapter 63 (relating to deficiency procedures for income, 
     estate, gift, and certain excise taxes) shall not apply in 
     respect of the assessment or collection of any penalty 
     imposed by subsection (a).''.
       (b) Clerical Amendment.--The table of sections for part I 
     of subchapter B of chapter 68 of such Code is amended by 
     adding at the end the following new item:

``Sec. 6699. Failure to file S corporation return.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to returns required to be filed after the date of 
     the enactment of this Act.

     SEC. 10. MODIFICATION OF REQUIRED INSTALLMENT OF CORPORATE 
                   ESTIMATED TAXES WITH RESPECT TO CERTAIN DATES.

       The percentage under subparagraph (B) of section 401(1) of 
     the Tax Increase Prevention and Reconciliation Act of 2005 in 
     effect on the date of the enactment of this Act is increased 
     by 1.50 percentage points.

  The SPEAKER pro tempore (Mr. Snyder). Pursuant to the rule, the 
gentlewoman from Ohio (Mrs. Jones) and the gentleman from Kentucky (Mr. 
Lewis) each will control 20 minutes.
  The Chair recognizes the gentlewoman from Ohio.

                              {time}  1600

  Mrs. JONES of Ohio. Mr. Speaker, I yield myself such time as I may 
consume.
  I am happy that the Congress is doing its part today to alleviate the 
pressure Americans all over the country are feeling due to the subprime 
mortgage crisis. It is estimated that before this housing slump is 
over, almost 2 million homeowners will lose their homes due to 
skyrocketing interest rates on their mortgages.
  In September of this year, the House passed the Mortgage Relief Debt 
Forgiveness Act of 2007 without controversy. The Members of the House 
agreed on a bipartisan basis that this relief is necessary to give 
homeowners peace of mind as they navigate the current difficulties in 
the housing market. The Senate amendment to this bill further 
demonstrates Congress's support for this relief.
  Many Americans are getting hit by the double whammy of, one, losing 
their homes to foreclosure and, two, getting slapped with a tax bill 
when the debt on their home is discharged by the lender. In situations 
where a lender forgives outstanding debt, it is considered income and, 
thus, is taxable.
  I believe that our Tax Code, above all, should promote fairness and 
equity. Under current law, if your House is under foreclosure and the 
bank discharges your debt, you receive a tax bill. I don't think that's 
fair or equitable. It doesn't seem right for individuals in this 
circumstance to face a tax bill when they really have no increase in 
their net worth. As I see it, their house went down in value, and the 
individuals couldn't meet their current requirements, resulting in 
foreclosure. The resolution we consider today rectifies that disconnect 
so that if a person's principal residence lost value, that loss won't 
give rise to a tax liability. The provision would sunset in 3 years.
  In addition, H.R. 3648, as amended, would provide a 3-year extension 
of the deduction for private mortgage insurance. The deduction makes it 
easier for homebuyers to avoid having to take out a risky high-interest 
second loan in order to make a down payment.
  Finally, the bill includes provisions to make it easier for taxpayers 
to form housing cooperation corporations.
  I hope this whole House can join the Ways and Means Committee members 
in strong support of this resolution. H.R. 3648 restores some fairness 
to the Tax Code by preventing the unexpected tax consequences of 
foreclosure from hurting homeowners already smarting from the loss of 
their homes. Passage today will direct this bill to the President's 
desk and clear the path for this important legislation to become law.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield myself as much time as I 
may consume.
  I rise today in strong support of the Mortgage Forgiveness Debt 
Relief Act of 2007. I've heard concerns from many homeowners in my 
district about the serious situation in the mortgage market. These 
declining prices have led some families to sell their homes for less 
than they paid.
  On August 31, President Bush spoke from the Rose Garden and called on 
Congress to address the crisis in the mortgage market. Included in the 
President's priorities was a bill that Congressman Rob Andrews and I 
introduced in April. Our legislation would relieve tax obligations on 
those who sell homes that have lost equity and had been forgiven a 
portion of outstanding mortgage debt. Our measure is the cornerstone of 
the larger bipartisan bill that we are considering here today.
  Under current law, only two categories of individuals pay taxes when 
selling their principal residence: those who have been able to realize 
a capital

[[Page 35953]]

gain of more than $250,000, or $500,000 on a joint return, and those 
who lose the equity in their home and are forced to pay taxes if the 
lender forgives some portion of the mortgage debt.
  It is unfair to tax people on phantom income, particularly when they 
have suffered serious economic loss and have less ability to pay the 
tax. The Mortgage Forgiveness Debt Relief Act would relieve this tax 
burden. The Andrews-Lewis provision states that no tax will be 
collected when a lender forgives part of the mortgage on the sale or 
disposition of a principal residence. This proposal has earned the 
support of the National Association of Home Builders, the National 
Association of Realtors and the United States Department of the 
Treasury.
  Addressing this Tax Code inequity and other long-term issues in the 
housing market goes to the core of our national economic stability. 
Today, we advance a bill to the President that seeks to calm financial 
markets, aid local communities, and support one of our most basic 
American aspirations: homeownership.
  I would like to thank my colleague Congressman Andrews for his 
commitment to this issue. I also appreciate the time and effort of my 
chairman, Congressman Rangel, Ranking Member McCrery and their staffs 
for moving this important measure to the House floor.
  The bill before us is a good first step toward addressing the 
mortgage situation. But more importantly, this bill is an example of 
what happens when both parties work together to produce good policy 
that will benefit millions of Americans.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. JONES of Ohio. Mr. Speaker, I want to thank our Chair, Mr. 
Rangel, and our ranking member for the hard work that they've done on 
this legislation.
  It gives me great pleasure to yield 2 minutes to the gentleman from 
Michigan (Mr. Levin).
  Mr. LEVIN. Thank you to my friend from Ohio for yielding.
  Bills that come up on suspension are often thought to be of less 
importance. That surely is not true here today. Tax equity has been a 
major principle in our efforts this year. And this legislation is an 
important aspect of that, a response to the subprime mortgage crisis.
  The data just released by Fannie Mae show that our State of Michigan 
leads the Nation in losses on bad mortgages. Other rankings have 
Michigan at second in the Nation in delinquencies and third in 
foreclosure inventory. Ohio is next in some respects, but many States, 
really, all States show immense numbers of people who are suffering.
  And nothing would seem more unfair than when someone loses their home 
to a foreclosure, if the bank sells their house for less than they owe, 
the IRS says ``pay taxes,'' and this remedies it. Also, as mentioned, 
this bill provides a 3-year extension of the deduction for mortgage 
insurance premiums, another vital part of this legislation.
  By leveling the playing field among mortgage products, we will make 
homeownership more affordable, especially at a time when so-called 
``piggy back'' loans are becoming more expensive, and in some cases 
difficult, to obtain at any price.
  And I close with this remark, ``we pay for it.'' We pay for it. 
That's also been an important principle, tax equity, but not deepening 
the hole of fiscal irresponsibility. And this bill lives up to both, 
equity and fiscal responsibility, and we're proud to support it.
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield 2 minutes to my good 
friend from Texas, Sam Johnson.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I rise in strong support of 
the Mortgage Forgiveness Debt Relief Act. I've said it before and I'm 
saying it again, the current problems with the mortgage and real estate 
markets are considerable, but they're not permanent. This bill finally 
gets it right and provides a 3-year window so that lenders can 
restructure and write down loans, allowing people to move on with their 
lives without being taxed on phantom income.
  I have confidence in the American economy and in the fact that real 
estate markets will rebound. Our economy is sound. The Federal Reserve 
is now addressing mortgage lending practices that were out of control. 
And it's appropriate to restructure loans without taxing phantom income 
from the forgiveness of these inappropriate loans.
  I am also glad to see this bill does not impose a luxury tax on one 
in 20 American families who own a second home. That tax on second homes 
also would have been an economic disaster for communities that rely 
upon tourism and recreation as their development strategy.
  This bill before us is an appropriate response to a painful but 
temporary problem. We should all vote ``yes'' on this issue.
  Mrs. JONES of Ohio. Mr. Speaker, I want to thank our chairman, Mr. 
Rangel, for allowing me to manage this bill because he knows that in 
Ohio, the foreclosure epidemic has gone from bad to worse, with new 
cases growing by nearly 24 percent from 2005.
  Another colleague of mine on this great committee, in my same class, 
I yield 2 minutes to Mr. Larson of Connecticut.
  Mr. LARSON of Connecticut. I thank the gentlelady from Ohio. And I 
also join in commending and thanking Mr. Rangel and Mr. Neal for their 
efforts in making sure that this legislation came to the floor.
  Let me further associate myself with the remarks of the distinguished 
gentlelady from Ohio. By the end of next year, 2 million foreclosures 
will occur in this country. That's 2 million people and families whose 
lives and finances will be uprooted, 2 million communities affected. 
That's why it was so important for this committee to act. We should not 
add to their burden. We have to make sure that we preserve the American 
Dream for them.
  The Ways and Means Committee reacted swiftly and reasonably to this 
crisis and said what we could do was make it easier for those who get a 
raw deal or are having a hard time. We could start by not making them 
have to pay taxes on money they will never see. And that is the beauty 
of this bill.
  Also contained in this bill is a provision that helps firefighters 
and first responders. It wasn't lost on Mr. Rangel, or Mr. Neal either, 
that it wasn't the FBI or the CIA or the armed services who responded 
at the World Trade Center, the Pentagon, or the fields of Pennsylvania. 
It was volunteer firefighters. But the IRS, in its wisdom, chooses to 
treat income that they receive from their county, their State or their 
communities in terms of rebates on property tax or other equipment as 
ordinary income. That is flat-out wrong. And again, I commend the 
leadership for making sure that we address these issues.
  Mr. LEWIS of Kentucky. Mr. Speaker, I yield 2 minutes to the 
gentleman from Texas (Mr. Brady).
  Mr. BRADY of Texas. Mr. Speaker, I have voted against this bill twice 
in the Chamber. I rise today in support of it.
  This bill will now, in the right way, provide relief to American 
families who, after losing their homes in the past, have gotten a bill 
from Uncle Sam, and it is wrong. At a time when people struggle to keep 
their homes and they may lose them or have to sell them at a loss, we 
shouldn't be kicking them when they are down. This bill will right that 
wrong, giving taxpayers temporary relief for at least 3 years, and will 
also allow taxpayers to continue to deduct the premiums that they pay 
for mortgage insurance, which will help a number of people afford 
homes.
  But, Mr. Speaker, I am most pleased that the Senate stripped from 
this bill something we sent out of the House twice, which was wrong. 
What we attempted to do was to increase the taxes on people who own 
second homes. Now, the original thought would be, that must be the 
wealthy. It's not; it's the middle class. In fact, 40 percent of all 
the home sales last year in America were to second homebuyers. And 
they're not the wealthy. The average income of those buyers was 
$82,000. So,

[[Page 35954]]

we were punishing middle-class families for scrimping on their first 
mortgage so they could save up for a vacation home or resort home or 
retirement home or maybe even an investment. That would have punished 
families. It would have hurt, I think, many communities whose future 
relies upon retirees in resort and vacation homes, and would have 
deepened the housing problems here in America rather than aid them. A 
number of us fought against that provision. We're pleased that the 
Senate removed it. This makes this a very bipartisan bill that has 
strong support. I urge my colleagues to support this bill.
  Let me point out, too, that I appreciate the leadership of Chairman 
Rangel on this, and I appreciate that he recognized this problem and 
moved on it. I appreciate the leadership of Mr. Lewis and Mr. Andrews, 
who have fought for this legislation for many years.
  Mrs. JONES of Ohio. Mr. Brady, we're happy you got a wake-up call. 
Maybe you could bring us a few other Members over here to our side.
  It gives me great pleasure to recognize now my colleague and good 
friend from the committee, Mr. Blumenauer, for 2 minutes.

                              {time}  1615

  Mr. BLUMENAUER. I appreciate the gentlewoman's courtesy in permitting 
me to speak on this bill.
  We are watching fiscal chickens come home to roost with this housing 
bubble that is slowly working its way through the system. As my good 
friend from Connecticut mentioned, we are looking at perhaps 2 million 
foreclosures looming. There is another 2 million figure to keep in 
mind, and that is the number of loans that are going to reset in the 
next 18 months. And many of these people were not particularly 
sophisticated. There are a number of folks that appear to have been 
lured into subprime loans that actually would have qualified for 
conventional, fixed-rate mortgages. And this is a ripple effect that 
can have a very profound consequence for people.
  If we see a 15-percent drop in housing values, which is projected by 
Goldman Sachs, we are talking about millions of families who can be in 
this situation of having phantom income. If it is a 20-percent drop, it 
is 3.7 million. And some people feel that 30 percent correction is not 
beyond question, and that would put almost 20 million American 
homeowners in this negative territory.
  It is important for us to make sure that people are not paying taxes 
on phantom income. Frankly, I am a little disappointed that the 
legislation that came back to us from the Senate is only 3 years 
because I fear that this is going to be a longer-term problem. And, 
frankly, I can't foresee any circumstance where this Congress would 
like to apply tax rates on phantom income when anybody is under water, 
getting a loan forgiveness. We have put careful provisions in this to 
make sure that it is not unlimited, it is not for wild speculation, but 
for typical, average everyday homeowners.
  I hope we pass this bill, but I also hope that we look at a long-term 
adjustment so that no one who is in this unfortunate circumstance ends 
up making a tax payment on phantom income when they have lost their 
home.
  Mr. LEWIS of Kentucky. I reserve my time.
  Mrs. JONES of Ohio. I join with my colleague to say I hope that at 
some point we will be able to extend this so it has no sunsetting 
provisions.
  I yield 2 minutes to my colleague from New Jersey (Mr. Andrews).
  Mr. ANDREWS. I would like to thank my friend from Ohio for yielding. 
I would like to thank my friend, Mr. Lewis, for his hard work on this 
legislation throughout the process, the gentleman from Louisiana (Mr. 
McCrery), and obviously our chairman, Mr. Rangel, and other members of 
the Ways and Means Committee, Mrs. Tubbs Jones in particular.
  When we started working on this project, it was a matter of simple 
fairness to Americans who sold a home under difficult circumstances. 
Now, unfortunately, the problem has grown into one of economic urgency 
because our economy is in trouble today in large part because of a drop 
in housing prices and housing values. And one of the reasons that we 
would have a glut on that market would be if people have to dump their 
properties on the market because they can't get a workout on the loans 
that they have because it would raise their taxes to come to a 
different arrangement with their lender.
  Through the wisdom of the committee, we are fixing this law in such a 
way that will encourage people to work out an arrangement with their 
mortgagee to work out a way they can pay their loans and stay in their 
homes. And if they stay in their home, we won't have that glut of 
supply in the housing market. If we don't have that glut of supply on 
the housing market, prices will stabilize and not drop, which will mean 
more Americans have more home equity, more Americans have economic 
confidence, and our economy can rebound.
  So I want to thank all those both on the Democratic and Republican 
side of the aisle for making this project a reality, in particular the 
staff of the Ways and Means Committee, for their hard work in making 
this a reality and urge a ``yes'' vote on this bill.
  Mr. LEWIS of Kentucky. I continue to reserve my time.


                             General Leave

  Mrs. JONES of Ohio. Mr. Speaker, I ask unanimous consent that all 
Members have 5 legislative days to submit remarks for the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from Ohio?
  There was no objection.
  Mrs. JONES of Ohio. It gives me great pleasure at this time to yield 
2 minutes to the gentlewoman from New York (Ms. Clarke). She is a 
freshman in Congress and has been a leader in working on a lot of 
issues, particularly this one; and I yield to her particularly because 
this bill expands some of the coverages for cooperative housing 
corporations which I am confident is an issue for the gentlelady from 
Brooklyn.
  Ms. CLARKE. Mr. Speaker, I want to commend and give praise to the 
gentlewoman from Ohio for her management of this very important 
legislation and, of course, to our distinguished chairman of the House 
Ways and Means Committee, the dean of our New York delegation, for his 
leadership on this issue and bringing this issue to the floor today.
  I rise in support of H.R. 3648, the Mortgage Forgiveness Debt Relief 
Act of 2007, because Americans need relief. We need relief. And under 
this bill, the mortgage debt forgiven through foreclosure, sale, or 
loan restructuring would no longer count as taxable income.
  Mr. Speaker, this bill is extremely vital to many New Yorkers, since 
a subprime tsunami is now sweeping across this Nation and many experts 
confirm that this wave will continue well into the next year with no 
end in sight. As a result, foreclosures are increasing at an alarming 
rate.
  As we count the last days of 2007, many expect more than 14,000 
foreclosures to be filed in New York City alone. Mr. Speaker, Congress 
must do all that it can to help Americans to keep their homes. So today 
I will cast an ``aye'' vote in support of the Mortgage Forgiveness Debt 
Relief Act of 2007, which helps struggling homeowners cope with the 
unanticipated penalty of foreclosure.
  Mr. LEWIS of Kentucky. In closing, I want to, again, thank Chairman 
Rangel and Ranking Member McCrery. Jim and the chairman have certainly 
done a good job in working together to bring about this piece of 
legislation. Also I would like to thank the majority and the minority 
staff for their hard work and effort on this. And, too, I would like to 
thank Kevin Modlin on my staff. He has worked hard to help move this 
legislation through the process. This is a good day for those 
homeowners that are in much need of some help. And of course, 
Congressman Andrews, thank you so much for your hard work on this and 
putting it forward.
  I yield back the balance of my time and ask for a ``yea'' vote on 
this important piece of legislation.

[[Page 35955]]


  Mrs. JONES of Ohio. Mr. Speaker, almost all of us dream of a day when 
we can have a place of our own. For most Americans, buying a home is 
the single best investment they will ever make. It is the first step to 
building wealth and can provide financial leverage for a family for a 
variety of things, including starting a business or funding an 
education. Therefore, we must put safeguards in place to ensure that 
people are able to keep their homes and not be thrown into further 
debt.
  That is one reason why I am pleased to rise in support of this piece 
of legislation that will allow taxpayers to exclude from their income 
debt that which was forgiven by a financial institution or lender. We 
cannot sit by as Congress and add insult to injury to our most 
vulnerable taxpayers. That is why I am so pleased to stand with my 
colleagues on the other side of the aisle in support of this very 
strong legislation in support of the American people.
  I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from Ohio (Mrs. Jones) that the House suspend the rules and 
concur in the Senate amendment to the bill, H.R. 3648.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the Senate amendment was concurred in.
  A motion to reconsider was laid on the table.

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