H.R. 5239 – Reading Mode

110th CONGRESS

2d Session

H. R. 5239

IN THE HOUSE OF REPRESENTATIVES

February 6, 2008

Mr. Porter (for himself and Ms. Schwartz) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide that the proceeds of qualified mortgage bonds may be used to provide refinancing for subprime loans, to provide a temporary increase in the volume cap for qualified mortgage bonds used to provide that refinancing, and for other purposes.

Modifications and increased volume cap with respect to qualified mortgage bonds used to refinance subprime loans

(a)

Use of qualified mortgage bonds proceeds for subprime refinancing loans

Section 143(k) of the Internal Revenue Code of 1986 (relating to other definitions and special rules) is amended by adding at the end the following new paragraph:

(12)

Special rules for subprime refinancings

(A)

In general

In the case of a residence which was originally financed by the mortgagor through a qualified subprime loan, this section shall be applied with the following modifications:

(i)

Subsection (i)(1) (relating to mortgages must be new mortgages) shall not apply.

(ii)

Subsection (a)(2)(D)(i) shall be applied by substituting 12-month period for 42-month period each place it appears.

(iii)

Subsection (d) (relating to 3-year requirement) shall not apply.

(iv)

Subsection (e) (relating to purchase price requirement) shall be applied by using the market value of the residence at the time of refinancing in lieu of the acquisition cost.

(B)

Qualified subprime loan

The term qualified subprime loan means an adjustable rate single-family residential mortgage loan originated after December 31, 2001, and before January 1, 2008, that the bond issuer determines would likely cause financial hardship to the borrower if not refinanced.

(C)

Termination

This paragraph shall not apply to any bonds issued after December 31, 2010.

(b)

Increase in volume cap for qualified mortgage bonds used to refinance subprime loans

(1)

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:

(5)

Increase for 2008 and set aside for qualified mortgage bonds used to refinance qualified subprime loans

(A)

In general

The State ceiling for each State for calendar year 2008 (determined without regard to this paragraph) shall be increased by an amount which bears the same ratio to $15,000,000,000 as—

(i)

the State ceiling for such State for such year (as so determined) bears to

(ii)

the aggregate of the State ceilings for all States (as so determined) for such year.

(B)

Set aside

(i)

In general

Not less than an amount equal to each State’s increase in the State ceiling under subparagraph (A) shall be allocated solely for the purpose of qualified mortgage issues which meets the requirement of clause (ii).

(ii)

Requirement

A qualified mortgage issue meets the requirement of this clause if all the financing provided by the issue is used to refinance qualified subprime loans (as defined in section 143(k)(12)(B)) to which section 143(k)(12) applies.

(2)

Carryforward of unused limitations

Subsection (f) of section 146 of such Code is amended by adding at the end the following new paragraph:

(6)

Special rules for increased volume cap under subsection (d)(5)

(A)

In general

No amount which is attributable to the increase under subsection (d)(5) may be used—

(i)

for a carryforward purpose other than issuing qualified mortgage bonds which meet the requirement of subsection (d)(5)(B)(ii), and

(ii)

to issue any bond after December 31, 2010.

(B)

Ordering rules

For purposes of subparagraph (A), any carryforward of an issuing authority’s volume cap for calendar year 2008 shall be treated as attributable to such increase to the extent of such increase.

(c)

Alternative minimum tax

(1)

In general

Clause (ii) of section 57(a)(5)(C) of the Internal Revenue Code of 1986 is amended by striking shall not include and all that follows and inserting

shall not include—

(I)

any qualified 501(c)(3) bond (as defined in section 145), or

(II)

any qualified mortgage bond (as defined in section 143(a)) or qualified veterans’ mortgage bond (as defined in section 143(b)) issued after December 31, 2007, and before January 1, 2011.

(2)

Conforming amendment

The heading for section 57(a)(5)(C)(ii) of such Code is amended by striking qualified 501(c)(3) bonds and inserting certain bonds.

(d)

Effective date

The amendments made by this section shall apply to bonds issued after December 31, 2007.