II
110th CONGRESS
2d Session
S. 3119
IN THE SENATE OF THE UNITED STATES
June 12, 2008
Ms. Collins introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To stimulate the economy by encouraging energy efficiency, infrastructure and workforce investment, and homeownership retention, and by amending the Internal Revenue Code of 1986 to provide certain business tax relief and incentives, and for other purposes.
Short title; table of contents
Short title
This Act may be cited
as the Economic Recovery Act of
2008
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—Tax provisions
Sec. 101. Credit for replacement of wood-burning stoves meeting environmental standards.
Sec. 102. Renewable electricity production credit.
Sec. 103. Permanent increase in limitations on expensing of certain depreciable business assets; study on expensing limits.
Sec. 104. 15-year straight-line cost recovery for qualified restaurant property.
TITLE II—Energy provisions
Sec. 201. Weatherization assistance.
Sec. 202. Energy Star programs.
TITLE III—Transportation provisions
Subtitle A—Build America bonds
Sec. 301. Credit to holders of Build America bonds.
Sec. 302. Transportation Finance Corporation.
Subtitle B—Commercial Truck Fuel Savings
Sec. 311. Short title.
Sec. 312. Findings.
Sec. 313. Definitions.
Sec. 314. Waiver of highway funding reduction relating to weight of vehicles using Interstate System highways.
Sec. 315. GAO truck safety demonstration report.
Sec. 316. Responsibilities of States.
TITLE IV—Workforce development
Sec. 401. Statewide and local workforce investment systems.
TITLE V—Housing provisions
Sec. 501. Insurance of homeownership retention mortgages.
Sec. 502. Study of auction or bulk refinance program.
Tax provisions
Credit for replacement of wood-burning stoves meeting environmental standards
In general
Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable personal credits) is amended by inserting after section 25D the following new section:
Replacement of wood-burning stoves
Allowance of credit
In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the qualified stove replacement expenditures paid or incurred by the taxpayer for the taxable year.
Limitation
The amount of the credit under subsection (a) with respect to the replacement of each non-compliant wood stove shall not exceed $500.
Qualified stove replacement expenditures
For purposes of this section—
In general
The term qualified stove replacement expenditures means expenditures made by the taxpayer for the purchase and installation of a compliant stove which—
is installed in a dwelling unit located in the United States, and
replaces a noncompliant wood stove used in such dwelling unit.
Compliant stove
The term compliant stove means—
a wood-burning
stove which meets the requirements set forth in the Standards of
Performance for New Residential Wood Heaters
issued by the
Environmental Protection Agency, and
a pellet or corn-burning stove.
Noncompliant wood stove
The term noncompliant wood stove means any wood-burning stove that is not a compliant stove.
Joint occupancy, cooperative housing corporations, and when expenditure made
Rules similar to the rules of paragraphs (4), (5), and (8) of section 25D(e) shall apply for purposes of this section.
Basis adjustment
For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.
Termination
This section shall not apply to expenditures made after December 31, 2010.
.
Conforming amendments
Subsection (a) of section 1016 of the Internal Revenue Code of 1986 is amended—
by striking
and
at the end of paragraph (35),
by striking the
period at the end of paragraph (36) and inserting , and
,
and
by adding at the end the following new paragraph:
to the extent provided in section 25E(e), in the case of amounts with respect to which a credit has been allowed under section 25E.
.
The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 25D the following new item:
Sec. 25E. Replacement of
wood-burning stoves.
.
Effective date
The amendments made by this section shall apply to expenditures for stoves purchased after the date of the enactment of this Act.
Renewable electricity production credit
Extension
Section 45(d) of the Internal Revenue Code
of 1986 (relating to qualified facilities) is amended by striking
January 1, 2009
each place it appears in paragraphs (1), (2),
(3), (4), (5), and (7) and inserting January 1, 2012
.
Repeal of municipal solid waste as qualified resource
In general
Paragraph (1) of section 45(c) of the Internal Revenue
Code of 1986 is amended by inserting and
at the end of
subparagraph (F) and by striking subparagraph (G).
Conforming amendment
Subsection (d) of section 45 of such Code is amended by striking paragraph (6).
Effective date
The amendments made by this subsection shall apply to property placed in service after the date of the enactment of this Act.
Extension of credit for residential energy efficient property
Subsection (g)
of section 25D of the Internal Revenue Code of 1986 (relating to termination)
is amended by striking December 31, 2008
and inserting
December 31, 2012
.
Permanent increase in limitations on expensing of certain depreciable business assets; study on expensing limits
In general
Subsection (b) of section 179 of the Internal Revenue Code of 1986 (relating to limitations) is amended—
by striking $25,000
and all
that follows in paragraph (1) and inserting $128,000.
,
by striking
$200,000
and all that follows in paragraph (2) and inserting
$512,000.
,
by striking
after 2007 and before 2011, the $125,000 and $500,000
in
paragraph (5)(A) and inserting after 2008, the $128,000 and the
$512,000
,
by striking
2006
in paragraph (5)(A)(ii) and inserting 2007
,
and
by striking paragraph (7).
Study
In general
The Secretary of the Treasury shall conduct a study on the use and impact of increased limitations on expensing of depreciable business assets under section 179 of the Internal Revenue Code of 1986, including—
the use of expensing following the increase of limitations in 2003, 2007, and 2008;
the impact of higher limitations on expensing on small businesses, including information on businesses by size and industry; and
the impact of higher limitations on expensing on economic activity, including business investment, business expansion, and job growth.
Report
The Secretary of the Treasury shall, not later than one year after the date of the enactment of this Act, submit a report on the results of the study required under paragraph (1) to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate.
Effective date
The amendments made by this section shall apply to taxable years beginning after December 31, 2008.
15-year straight-line cost recovery for qualified restaurant property
In general
Clause (v) of section 168(e)(3)(E) of the Internal
Revenue Code of 1986 (relating to 15-year property) is amended by striking
January 1, 2008
and inserting January 1,
2010
.
Effective date
The amendment made by this section shall apply to property placed in service after December 31, 2007.
Energy provisions
Weatherization assistance
Section 422 of the Energy Conservation and Production Act (42 U.S.C. 6872) is amended to read as follows:
Authorization of appropriations
There are authorized to be appropriated to carry out the weatherization program under this part—
$1,000,000,000 for fiscal year 2009;
$1,200,000,000 for fiscal year 2010; and
$1,400,000,000 for fiscal year 2011.
.
Energy Star programs
There are authorized to be appropriated for use in carrying out the Energy Star program under section 324A of the Energy Policy and Conservation Act (42 U.S.C. 6294a)—
to the Administrator of the Environmental Protection Agency, $100,000,000 for each fiscal year; and
to the Secretary of Energy, $12,000,000 for each fiscal year.
Transportation provisions
Build America bonds
Credit to holders of Build America bonds
In general
Subpart H of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to nonrefundable credit to holders of certain bonds) is amended by adding at the end the following new section:
Credit to holders of Build America bonds
Allowance of credit
If a taxpayer holds a Build America bond on 1 or more credit allowance dates of the bond occurring during any taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to such dates.
Amount of credit
In general
The amount of the credit determined under this subsection with respect to any credit allowance date for a Build America bond is 25 percent of the annual credit determined with respect to such bond.
Annual credit
The annual credit determined with respect to any Build America bond is the product of—
the applicable credit rate, multiplied by
the outstanding face amount of the bond.
Applicable credit rate
For purposes of paragraph (2), the applicable credit rate with respect to an issue is the rate equal to an average market yield (as of the day before the date of sale of the issue) on outstanding long-term corporate debt obligations (determined in such manner as the Secretary prescribes).
Credit allowance date
For purposes of this section, the term credit allowance date means—
March 15,
June 15,
September 15, and
December 15.
Special rule for issuance and redemption
In the case of a bond which is issued during the 3-month period ending on a credit allowance date, the amount of the credit determined under this subsection with respect to such credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during which the bond is outstanding. A similar rule shall apply when the bond is redeemed or matures.
Limitation based on amount of tax
The credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
the sum of the credits allowable under this part (other than subpart C, section 1400N(l), and this section).
Credit included in gross income
Gross income includes the amount of the credit allowed to the taxpayer under this section (determined without regard to subsection (c)) and the amount so included shall be treated as interest income.
Build America bond
For purposes of this section, the term Build America bond means any bond issued as part of an issue if—
95 percent or more of the proceeds of such issue are to be used for expenditures incurred after the date of the enactment of this section for 1 or more qualified projects pursuant to an allocation of such proceeds to such project or projects by the Transportation Finance Corporation,
the bond is issued by the Transportation Finance Corporation and is in registered form (within the meaning of section 149(a)),
the Transportation Finance Corporation certifies that it meets the State contribution requirement of subsection (l) with respect to such project, as in effect on the date of issuance,
the Transportation Finance Corporation certifies that the State in which an approved qualified project is located meets the requirement described in subsection (m),
the face amount of such bond, when added to the face amount of all Build America bonds previously issued in the calendar year, does not exceed the Build America bond limitation for such year under subsection (g),
the term of each bond which is part of such issue does not exceed 30 years,
the payment of principal with respect to such bond is the obligation of the Transportation Finance Corporation, and
the issue meets the requirements of subsection (h).
Qualified project
For purposes of this section, the term qualified project means the capital improvements to any transportation infrastructure project of any governmental unit or other person, including roads, bridges, rail and transit systems, ports, and inland waterways, proposed by 1 or more States and approved by the Transportation Finance Corporation, but does not include costs of operations or maintenance with respect to such project.
Limitation on amount of bonds designated
National limitation
There is a Build America bond limitation for each calendar year. Such limitation is—
$5,000,000,000 for 2009,
$5,000,000,000 for 2010,
$10,000,000,000 for 2011,
$10,000,000,000 for 2012,
$10,000,000,000 for 2013,
$10,000,000,000 for 2014, and
except as provided in paragraph (4), zero thereafter.
Minimum allocations to States
In making allocations for each calendar year under subsection (e)(1), the Transportation Finance Corporation shall ensure that the amount allocated for qualified projects located in each State for such calendar year is not less than 1 percent of the total amount allocated for such year.
Carryover of unused issuance limitation
If for any calendar year the limitation amount imposed by paragraph (1) exceeds the amount of Build America bonds issued during such year, such excess shall be carried forward to one or more succeeding calendar years as an addition to the limitation imposed by paragraph (1) and until used by issuance of Build America bonds.
Issuance of small denomination bonds
From the Build America bond limitation for each year, the Transportation Finance Corporation shall issue a limited quantity of Build America bonds in small denominations suitable for purchase as gifts by individual investors wishing to show their support for investing in America’s transportation infrastructure.
Special rules relating to expenditures
In general
An issue shall be treated as meeting the requirements of this subsection if, as of the date of issuance, the Transportation Finance Corporation reasonably expects—
at least 95 percent of the proceeds of such issue are to be spent for 1 or more qualified projects within the 5-year period beginning on such date,
to incur a binding commitment with a State or third party to spend at least 10 percent of the proceeds of such issue, or to commence construction, with respect to such projects within the 12-month period beginning on such date, and
to proceed with due diligence to complete such projects and to spend the proceeds of such issue.
Rules regarding continuing compliance after 5-year determination
To the extent that less than 95 percent of the proceeds of such issue are expended by the close of the 5-year period beginning on the date of issuance, the Transportation Finance Corporation shall redeem all of the nonqualified bonds within 90 days after the end of such period. For purposes of this paragraph, the amount of the nonqualified bonds required to be redeemed shall be determined in the same manner as under section 142.
Reallocation
In the event the recipient of an allocation under subsection (g) after notice and a reasonable opportunity to take corrective action fails to demonstrate to the satisfaction of the Transportation Finance Corporation that its actions will allow the Transportation Finance Corporation to meet the requirements under this subsection, the Transportation Finance Corporation may redistribute the allocation meant for such recipient to other recipients.
Special rules relating to arbitrage
A bond which is a part of an issue shall not be treated as a Build America bond unless, with respect to the issue of which such bond is a part, the Transportation Finance Corporation satisfies the arbitrage requirements of section 148 with respect to proceeds of the issue.
Recapture of portion of credit where cessation of compliance
If any bond which when issued purported to be a Build America bond ceases to be such a bond, the Transportation Finance Corporation shall pay to the United States (at the time required by the Secretary) an amount equal to the sum of—
the aggregate of the credits allowable under this section with respect to such bond (determined without regard to subsection (c)) for taxable years ending during the calendar year in which such cessation occurs and each succeeding calendar year ending with the calendar year in which such bond is redeemed by the Transportation Finance Corporation, and
interest at the underpayment rate under section 6621 on the amount determined under paragraph (1) for each calendar year for the period beginning on the first day of such calendar year.
Build America Bonds Trust Account
In general
The following amounts shall be held in a Build America Bonds Trust Account by the Transportation Finance Corporation:
The proceeds from the sale of all bonds issued under this section.
The investment earnings on proceeds from the sale of such bonds.
The amount described in paragraph (2).
Any earnings on any amounts described in subparagraph (A), (B), or (C).
Appropriation of revenues
There is hereby appropriated to the Build America Bonds Trust Account an amount equal to the lesser of—
the revenues resulting from the imposition of fees pursuant to section 13031 of the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c) for fiscal years beginning after September 31, 2008, or
$50,000,000,000.
Use of funds
Amounts in the Build America Bonds Trust Account may be used only to pay costs of qualified projects, redeem Build America bonds, and fund the operations of the Transportation Finance Corporation, except that amounts withdrawn from the Build America Bonds Trust Account to pay costs of qualified projects may not exceed the proceeds from the sale of Build America bonds described in subsection (e)(1).
Use of remaining funds in Build America bonds trust account
Upon the redemption of all Build America bonds issued under this section, any remaining amounts in the Build America Bonds Trust Account shall be available to the Transportation Finance Corporation to pay the costs of any qualified project.
Applicability of Federal law
The requirements of any Federal law, including titles 23, 40, and 49 of the United States Code, which would otherwise apply to projects to which the United States is a party or to funds made available under such law and projects assisted with those funds shall apply to—
funds made available under the Build America Bonds Trust Account for similar qualified projects, including contributions required under subsection (l), and
similar qualified projects assisted by the Transportation Finance Corporation through the use of such funds.
Investment
Subject to subsections (h) and (i), it shall be the duty of the Transportation Finance Corporation to invest in investment grade obligations such portion of the Build America Bonds Trust Account as is not, in the judgment of the Board of Directors of the Transportation Finance Corporation, required to meet current withdrawals. To the maximum extent practicable, investments should be made in securities that support infrastructure investment at the State and local level.
State contribution requirements
In general
For purposes of subsection (e)(3), the State contribution requirement of this subsection is met with respect to any qualified project if the Transportation Finance Corporation has received from 1 or more States, not later than the date of issuance of the bond, written commitments for matching contributions of not less than 20 percent (or such smaller percentage as determined under title 23, United States Code, for such State) of the cost of the qualified project.
State matching contributions may not include Federal funds
For purposes of this subsection, State matching contributions shall not be derived, directly or indirectly, from Federal funds, including any transfers from the Highway Trust Fund under section 9503.
Utilization of updated construction technology for qualified projects
For purposes of subsection (e)(4), the requirement of this subsection is met if the appropriate State agency relating to the qualified project is utilizing updated construction technologies.
Other definitions and special rules
For purposes of this section—
Bond
The term bond includes any obligation.
Transportation finance corporation
The term Transportation Finance Corporation means the corporation established under section 302(a) of the Economic Recovery Act of 2008.
Partnership; S corporation; and other pass-thru entities
In general
In the case of a partnership, trust, S corporation, or other pass-thru entity, rules similar to the rules of section 41(g) shall apply with respect to the credit allowable under subsection (a).
No basis adjustment
In the case of a bond held by a partnership or an S corporation, rules similar to the rules under section 1397E(i) shall apply.
Bonds held by regulated investment companies
If any Build America bond is held by a regulated investment company, the credit determined under subsection (a) shall be allowed to shareholders of such company under procedures prescribed by the Secretary.
Credits may be stripped
Under regulations prescribed by the Secretary—
In general
There may be a separation (including at issuance) of the ownership of a Build America bond and the entitlement to the credit under this section with respect to such bond. In case of any such separation, the credit under this section shall be allowed to the person who on the credit allowance date holds the instrument evidencing the entitlement to the credit and not to the holder of the bond.
Certain rules to apply
In the case of a separation described in subparagraph (A), the rules of section 1286 shall apply to the Build America bond as if it were a stripped bond and to the credit under this section as if it were a stripped coupon.
Credits may be transferred
Nothing in any law or rule of law shall be construed to limit the transferability of the credit or bond allowed by this section through sale and repurchase agreements.
Reporting
The Transportation Finance Corporation shall submit reports similar to the reports required under section 149(e).
Prohibition on use of highway trust fund
Notwithstanding any other provision of law, no funds derived from the Highway Trust Fund established under section 9503 shall be used to pay for credits under this section or for the administrative costs of the Transportation Finance Corporation.
.
Reporting
Subsection (d) of section 6049 of the Internal Revenue Code of 1986 (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph:
Reporting of credit on Build America bonds
In general
For purposes of subsection (a), the term interest includes amounts includible in gross income under section 54A(d) and such amounts shall be treated as paid on the credit allowance date (as defined in section 54A(b)(4)).
Reporting to corporations, etc
Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A), subsection (b)(4) shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such subsection.
Regulatory authority
The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.
.
Conforming amendment
Section 54(c)(2) of the Internal Revenue Code of 1986
is amended by inserting section 54A,
after subpart
C,
.
Clerical amendments
The table of sections for subpart H of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 54A. Credit for holders of Build America bonds.
.
Effective date
The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act.
Transportation Finance Corporation
Recognition and status
Congress grants consent and recognition to the
establishment by 2 or more State infrastructure banks (established under
section 610 of title 23, United States Code) of a multistate organization to be
known as the Transportation Finance Corporation
(hereafter in
this section referred to as the Corporation
). Additional State
infrastructure banks may join the Transportation Finance Corporation subsequent
to its establishment.
Functions of Corporation
The Corporation—
is authorized to issue Build America bonds for the financing of qualified projects as required under section 54A of the Internal Revenue Code of 1986,
is authorized to establish and operate the Build America Bonds Trust Account as required under section 54A(k) of such Code,
is authorized to act as a centralized entity to provide financing for qualified projects (as defined in section 54A(f) of such Code),
may—
leverage resources and stimulate public and private investment in transportation infrastructure,
encourage States to create additional opportunities for the financing of transportation infrastructure,
perform any other function the sole purpose of which is to carry out the financing of qualified projects through Build America bonds, and
not later than February 15 of each year shall submit a report to Congress describing the activities of the Corporation for the preceding year.
Exemption from taxes
In general
The Corporation, including its franchise, capital, reserves, surplus, sinking funds, mortgages or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
Financial obligations
Build America bonds or other obligations issued by the Corporation and the interest on or tax credits with respect to its bonds or other obligations shall not be subject to taxation by any State, county, municipality, or local taxing authority.
Construction regarding recognition and status
In general
Nothing in this section shall be construed to establish the Corporation as a department, agency, or instrumentality of the United States Government, to establish the members of any governing board or the officers and employees of the Corporation, as officers or employees of the United States Government, or to subject the Corporation to the provisions of title 31, United States Code.
United States not obligated
The deposit of Federal funds into the Build America Bonds Trust Account established under section 54A(k) of the Internal Revenue Code of 1986 shall not be construed as a commitment, guarantee, or obligation on the part of the United States to any third party, nor shall any third party have any right against the United States for payment solely by virtue of the contribution. Any security or debt-financing instrument issued by the Corporation shall expressly state that the security or instrument does not constitute a commitment, guarantee, or obligation of the United States.
Commercial Truck Fuel Savings
Short title
This subtitle may be
cited as the Commercial Truck Fuel Savings Demonstration Act of
2008
.
Findings
Congress finds that—
diesel fuel prices have increased more than 50 percent during the 1-year period between May 2007 and May 2008;
laws governing Federal highway funding effectively impose a limit of 80,000 pounds on the weight of vehicles permitted to use highways on the Interstate System;
the administration of that provision in many States has forced heavy tractor-trailer and tractor-semitrailer combination vehicles traveling in those States to divert onto small State and local roads on which higher vehicle weight limits apply under State law;
the diversion of those vehicles onto those roads increases fuel costs because of increased idling time and total travel time along those roads; and
permitting heavy commercial vehicles, including tanker trucks carrying hazardous material and fuel oil, to travel on Interstate System highways when fuel prices are high would provide significant savings in the transportation of goods throughout the United States.
Definitions
In this subtitle:
Commissioner
The term Commissioner means the Commissioner of Transportation of a State.
Covered interstate system highway
In general
The term covered Interstate System highway means a highway designated as a route on the Interstate System.
Exclusion
The term covered Interstate System highway does not include any portion of a highway that, as of the date of the enactment of this Act, is exempt from the requirements of subsection (a) of section 127 of title 23, United States Code, pursuant to a waiver under that subsection.
Interstate system
The term Interstate System has the meaning given the term in section 101(a) of title 23, United States Code.
Waiver of highway funding reduction relating to weight of vehicles using Interstate System highways
Prohibition relating to certain vehicles
Notwithstanding section 127(a) of title 23, United States Code, the total amount of funds apportioned to a State under section 104(b)(1) of that title for any period may not be reduced under section 127(a) of that title if a State permits a vehicle described in subsection (b) to use a covered Interstate System highway in the State in accordance with the conditions described in subsection (c).
Combination vehicles in excess of 80,000 pounds
A vehicle described in this subsection is a vehicle having a weight in excess of 80,000 pounds that—
consists of a 3-axle tractor unit hauling a single trailer or semitrailer; and
does not exceed any vehicle weight limitation that is applicable under the laws of a State to the operation of the vehicle on highways in the State that are not part of the Interstate System, as those laws are in effect on the date of enactment of this Act.
Conditions
This section shall apply at any time at which the weighted average price of retail number 2 diesel in the United States is $3.50 or more per gallon.
Effective date and termination
This section shall not remain in effect—
after the date that is 2 years after the date of enactment of this Act; or
before the end of that 2-year period, after any date on which the Secretary of Transportation—
determines that—
operation of vehicles described in subsection (b) on covered Interstate System highways has adversely affected safety on the overall highway network; or
a Commissioner has failed faithfully to use the highway safety committee as described in section 316(2)(A) or to collect the data described in section 316(3); and
publishes the determination, together with the date of termination of this section, in the Federal Register.
Consultation regarding termination for safety
In making a determination under subsection (d)(2)(A)(i), the Secretary of Transportation shall consult with the highway safety committee established by a Commissioner in accordance with section 316.
GAO truck safety demonstration report
The Comptroller General of the United States shall carry out a study of the effects of participation in the program under section 314 on the safety of the overall highway network in States participating in that program.
Responsibilities of States
For the purpose of section 314, a State shall be considered to meet the conditions under this section if the Commissioner of the State—
submits to the Secretary of Transportation a plan for use in meeting the conditions described in paragraphs (2) and (3);
establishes and chairs a highway safety committee that—
the Commissioner uses to review the data collected pursuant to paragraph (3); and
consists of representatives of—
agencies of the State that have responsibilities relating to highway safety;
municipalities of the State;
organizations that have evaluation or promotion of highway safety among the principal purposes of the organizations; and
the commercial trucking industry; and
collects data on the net effects that the operation of vehicles described in section 314(b) on covered Interstate System highways have on the safety of the overall highway network, including the net effects on single-vehicle and multiple-vehicle collision rates for those vehicles.
Workforce development
Statewide and local workforce investment systems
Section 137 of the Workforce Investment Act of 1998 (29 U.S.C. 2872) is amended to read as follows:
Authorization of appropriations
Youth activities
Fiscal year 2009
There is authorized to be appropriated and there is appropriated to carry out the activities described in section 127(a), $1,174,000,000 for fiscal year 2009.
Fiscal year 2010
There are authorized to be appropriated to carry out the activities described in section 127(a), such sums as may be necessary for fiscal year 2010.
Adult employment and training activities
Fiscal year 2009
There is authorized to be appropriated and there is appropriated to carry out the activities described in section 132(a)(1), $1,099,000,000 for fiscal year 2009.
Fiscal year 2010
There are authorized to be appropriated to carry out the activities described in section 132(a)(1), such sums as may be necessary for fiscal year 2010.
Dislocated worker employment and training activities
Fiscal year 2009
There is authorized to be appropriated and there is appropriated to carry out the activities described in section 132(a)(2), $1,945,000,000 for fiscal year 2009.
Fiscal year 2010
There are authorized to be appropriated to carry out the activities described in section 132(a)(2), such sums as may be necessary for fiscal year 2010.
.
Housing provisions
Insurance of homeownership retention mortgages
Mortgage insurance program
Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the following new section:
Insurance of homeownership retention mortgages
Authority
In general
The Secretary shall, subject only to the absence of qualified request for insurance under this section and to the limitations under subsection (e) of this section and section 531(a), make commitments to insure and insure any mortgage covering a 1- to 4-family residence that is made for the purpose of paying or prepaying outstanding obligations under an existing mortgage or mortgages on the residence if the mortgage being insured under this section meets the requirements of this section, as established by the Secretary, and of section 203, except as modified by this section.
Establishment and implementation of program requirements
The Secretary shall establish program requirements and standards under this section and the Secretary shall implement such requirements and standards. The Secretary may establish and implement any requirements or standards through interim guidance and mortgage letters.
Requirements
To be eligible for insurance under this section, a mortgage shall comply with all of the following requirements:
Owner occupied principal residence requirement
The residence to be covered by the mortgage insured under this section shall be occupied by the mortgagor as the principal residence of the mortgagor.
Lack of capacity to pay existing mortgage or mortgages
Borrower certification
The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor has not intentionally defaulted on the existing mortgage or mortgages.
Loss mitigation responsibilities
This section may not be construed to alter or in any way affect the responsibilities of any party (including the mortgage servicer) to engage in any or all loan modification or other loss mitigation strategies to maximize value to investors as established by any applicable contract.
Eligibility of mortgages by date of origination
The existing senior mortgage shall have been originated on before December 31, 2007.
Maximum loan to value ratio for new loans
The mortgage being insured under this section shall involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve and including the mortgage insurance premium paid pursuant to subsection (d)(1)) in an amount not to exceed 90 percent of the current appraised value of the property. Section 203(d) shall not apply to mortgages insured under this section.
Required waiver of prepayment penalties and fees
All penalties for prepayment of the existing mortgage or mortgages, and all fees and penalties related to default or delinquency on all existing mortgage or mortgages, shall be waived or forgiven.
Required loan reduction
Reduction of indebtedness under existing senior mortgage
The amount of indebtedness on the existing mortgage or mortgages on the residence shall have been substantially reduce by such percentage as the Secretary may require, and such reduction shall at least be sufficient to—
provide for the refinancing of such existing mortgage or mortgages in an amount not greater than 90 percent of the current appraised value of the property involved;
pay the full amount of the single premium to be collected pursuant to subsection (d)(1) (which shall be an amount up to 3.0 percent of the amount of the original insured principal obligation of the mortgage insured under this section and which shall serve as an additional reserve to cover possible loan losses); and
pay the full amount of the loan origination fee and any other closing costs, not to exceed 2.0 percent of the amount of the original insured principal obligation of the mortgage insured under this section.
Extinguishment of debt by refinancing
Required agreement
All existing holders of mortgage liens on the property involved shall agree to accept the proceeds of the insured loan as payment in full of all indebtedness under all existing mortgages, and all encumbrances related to such mortgages shall be removed. The Secretary may take such action as the Secretary considers necessary or appropriate to facilitate coordination and agreement between the holders of the existing senior mortgage and any existing subordinate mortgages, taking into consideration the subordinate lien status of such subordinate mortgages, to comply with the requirement under this subparagraph.
Treatment of multiple mortgage liens
In addition to clause (i), the Secretary shall adopt 1 of the following approaches for all mortgages or such classes of mortgages as the Secretary may determine and may, from time to time, reconsider:
Fixed price
As a requirement for participation in this program, all existing lien holders will agree to not provide any payment to subordinate lien holders other than such payment in accordance with a formula established by the Secretary as set forth in clause (iii); except that the Secretary may establish a short period within which first and subordinate lien holders may negotiate to extinguish all subordinate liens for compensation that may be different from the amount determined under such formula set forth in clause (iii).
Shared equity
The Secretary may require the mortgagor under a mortgage insured under this section to agree to share a portion of any future equity in the mortgaged property with holders of existing subordinate mortgages, in accordance with a formula for such shared equity established by the Secretary as set forth in clause (iii), except that payments of such shared equity may be made only after the Secretary recovers all amounts owed to the Secretary with respect to such mortgage pursuant to the program under this section (including amounts owed pursuant to paragraph (8)).
Formula
In determining a formula for determining any payments to subordinate lien holders pursuant to subclauses (I) and (II) of clause (ii), and in any reconsideration of such formula as the Secretary may from time to time undertake, the Secretary shall take into consideration the current market value of such liens.
Voluntary program
This subparagraph may not be construed to require any holder of any existing mortgage to participate in the program under this section generally, or with respect to any particular loan.
Source of payments for subordinate loans
Any amounts paid to holders of any existing subordinate mortgages in connection with the origination and insurance of a mortgage under this section shall derive only from—
the holder of the existing senior mortgage; or
in the case only of the shared equity approach under clause (ii)(II), the mortgagor under the mortgage insured under this section.
Required reduction of debt service
The debt service payments due under the mortgage insured under this section shall be in an amount that is substantially reduced from the debt service payments due under the existing mortgage or mortgages, which reduction may be achieved through a reduction of indebtedness, a reduction in the interest rate being paid, or an extension of the term of the mortgage, or any combination thereof.
Financial recovery to Federal government through exit premium
Subordinate lien
The mortgage shall provide that the Secretary shall retain a lien on the residence involved, which shall be subordinate to the mortgage insured under this section but senior to all other mortgages on the residence that may exist at any time, and which shall secure the repayment of the amount due under subparagraph (D).
No interest or payment during mortgage
The amount secured by the lien retained by the Secretary pursuant to subparagraph (A) shall not bear interest and shall not be repayable to the Secretary except as provided in subparagraph (D) of this paragraph.
Net proceeds available for exit premium
Upon the sale, refinancing, or other disposition of the residence covered by a mortgage insured under this section, any proceeds resulting from such disposition that remain after deducting the remaining insured principal balance of the mortgage insured under this section shall be available to meet the obligation under subparagraph (D).
Exit premium
Upon any refinancing of the mortgage insured under this section or any sale or disposition of the residence covered by the mortgage, the Secretary shall, subject to the availability of sufficient net proceeds in subparagraph (C), receive the greater of—
3 percent of the amount of the original insured principal obligation of the mortgage; or
a percentage of the portion of the net proceeds described in subparagraph (C), which shall be—
in the case of any refinancing, sale, or disposition occurring during the first year of the term of the mortgage, 100 percent of such net proceeds;
in the case of any refinancing, sale, or disposition occurring during the second year of the term of the mortgage, 80 percent;
in the case of any refinancing, sale, or disposition occurring during the third year of the term of the mortgage, 60 percent;
in the case of any refinancing, sale or disposition occurring during the fourth year of the term of the mortgage, 40 percent;
in the case of any refinancing, sale, or disposition occurring during the fifth year of the term of the mortgage, 20 percent; and
in the case of any refinancing, sale, or disposition occurring after the end of the fifth year, 0 percent.
Authority to prohibit new second liens
The Secretary may prohibit borrowers from granting a new second lien on the mortgaged property during the first 5 years of the term of the mortgage insured under this section.
Documentation and verification of income
In complying with the FHA underwriting requirements under the program under this section, the mortgagee under the mortgage shall document and verify the income of the mortgagor in accordance with procedures and standards that the Secretary shall establish.
Fixed rate mortgage
The mortgage insured under this section shall bear interest at a single rate that is fixed for the entire term of the mortgage.
Flexible underwriting criteria
The Secretary shall establish underwriting standards for mortgages insured under this section that—
ensure that each mortgagor under a mortgage insured under this section has a reasonable expectation of repaying the mortgage, taking into consideration the mortgagor’s income, assets, liabilities, payment history, and other applicable criteria; and
provide for the underwriter of the insured loan to provide such representations and warranties as the Secretary considers necessary or appropriate for the Secretary to enforce compliance with all underwriting and appraisal standards of the program.
Premiums
For each mortgage insured under this section, the Secretary shall establish and collect—
at the time of insurance, a single premium payment in an amount up to 3.0 percent of the amount of the original insured principal obligation of the mortgage, which shall be paid from the proceeds of the mortgage being insured under this section, through the reduction of the amount of indebtedness on the existing senior mortgage required under subsection (b)(6)(A);
in addition to the premium under paragraph (1), annual premium payments in an amount up to 1.50 percent of the remaining insured principal balance of the mortgage; and
an exit premium in the amount determined under subsection (b)(8), but which shall not be less than 3.0 percent of the original insured principal obligation of the mortgage, subject only to the availability of sufficient net proceeds from sale, refinancing, or other disposition of the property, as determined in subsection (b)(8).
Limitation on aggregate insurance authority
The aggregate original principal obligation of all mortgages insured under this section may not exceed $300,000,000,000.
Enhancement of FHA capacity
The Secretary shall take such actions as may be necessary to—
contract for the establishment of underwriting criteria, automated underwriting systems, pricing standards, and other factors relating to eligibility for mortgages insured under this section;
contract for independent quality reviews of underwriting, including appraisal reviews and fraud detection, of mortgages insured under this section or pools of such mortgages; and
increase personnel of the Department as necessary to process or monitor the processing of mortgages insured under this section.
Monitoring of underwriting risk
Monitoring of designated underwriters
The Secretary shall monitor independent quality reviews as established pursuant to subsection (f)(2) to—
determine compliance of designated underwriters with underwriting standards;
determine rates of delinquency, claims rates, and loss rates of designated underwriters; and
terminate eligibility of designated underwriters that do not meet minimum performance standards as the Secretary may establish and implement.
Reports by oversight board
The Secretary shall submit monthly reports to Congress identifying the progress of the program for mortgage insurance under this section, which shall contain the following information for each month:
The number of new mortgages insured under this section, including the location of the properties subject to such mortgages by census tract.
The aggregate principal obligation of new mortgages insured under this section.
The average amount by which the indebtedness on existing mortgages is reduced in accordance with subsection (b)(6).
The average amount by which the debt service payments on existing mortgages is reduced in accordance with subsection (b)(7).
The amount of premiums collected for insurance of mortgages under this section.
The claim and loss rates for mortgages insured under this section.
The race, ethnicity, gender, and income of the mortgagors, aggregated by geographic areas at least as specific as census tracts, except where necessary to protect the privacy of the borrower.
Any other information that the Secretary considers appropriate.
Report by inspector general
The Inspector General of the Department of Housing and Urban Development shall conduct an annual audit of the program for mortgage insurance under this section to determine compliance with this section and program rules.
Definitions
For purposes of this section, the following definitions apply:
Existing mortgage
The term existing mortgage means, with respect to a mortgage insured under this section, a mortgage that is to be extinguished, and paid or prepaid, from the proceeds of the mortgage insured under this section.
Existing senior mortgage
The term existing senior mortgage means, with respect to a mortgage insured under this section, the existing mortgage that has superior priority.
Existing subordinate mortgage
The term existing subordinate mortgage means, with respect to a mortgage insured under this section, an existing mortgage that has subordinate priority to the existing senior mortgage.
Sunset
The authority of the Secretary to make any new commitment to insure any mortgage under this section shall terminate upon the expiration of the 2-year period beginning on the date of the enactment of the Economic Recovery Act of 2008.
.
Study of auction or bulk refinance program
Study
The
Board of Governors of the Federal Reserve System (in this section referred to
as the Board of Governors
), in consultation with the Secretary
of Housing and Urban Development, shall conduct a study of the need for and
efficacy of an auction or bulk refinancing mechanism to facilitate refinancing
of existing residential mortgages that are at risk for foreclosure into
mortgages insured under the mortgage insurance program under title II of the
National Housing Act. The study shall identify and examine various options for
mechanisms under which lenders and servicers of such mortgages may make bids
for forward commitments for such insurance in an expedited manner.
Content
Analysis
The study required under subsection (a) shall analyze—
the feasibility of establish a mechanism that would facilitate the more rapid refinancing of borrowers at risk of foreclosure into performing mortgages insured under title II of the National Housing Act;
whether such a mechanism would provide an effective and efficient mechanism to reduce foreclosures on qualified existing mortgages;
whether the use of an auction or bulk refinance program is necessary to stabilize the housing market and reduce the impact of turmoil in that market on the economy of the United States;
whether there are other mechanisms or authority that would be useful to reduce foreclosure; and
any other factors that the Board of Governors considers relevant.
Determinations
To the extent that the Board of Governors finds that a facility of the type described in paragraph (1) is feasible and useful, the study shall—
determine and identify any additional authority or resources needed to establish and operate such a mechanism;
determine whether there is a need for additional authority with respect to the loan underwriting criteria included in section 257 of the National Housing Act or with respect to the eligibility of participating borrowers, lenders, or holders of liens; and
determine whether such underwriting criteria should be established on the basis of individual loans, in the aggregate, or otherwise to facilitate the goal of refinancing borrowers at risk of foreclosure into viable loans insured under the National Housing Act.
Report
Not later than the expiration of the 60-day period beginning on the date of the enactment of this Act, the Board of Governors shall submit a report regarding the results of the study conducted under this section to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. The report shall include a detailed description of the analyses required under subsection (b)(1) and the determinations made pursuant to subsection (b)(2), and shall include any other findings and recommendations of the Board of Governors pursuant to the study, including identifying various options for mechanisms described in subsection (a).