Amends the Internal Revenue Code to permit certain amendments, waivers, or other modifications to mortgages held by a Real Estate Mortgage Investment Conduit (REMIC) or a Grantor Trust without disqualifying such mortgages as REMIC or Grantor Trust mortgages. Permits amendments, waivers, or modifications that do not: (1) extend the final maturity date of a mortgage; (2) increase the outstanding balance of the mortgage; (3) result in the release of an interest in real property securing the mortgage; or (4) result in an instrument or property right which is not debt for Federal income tax purposes. Exempts such amendments, waivers, or modifications from the penalty for prohibited transactions.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1010 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 1010
To amend the Internal Revenue Code of 1986 to allow certain
modifications to be made to qualified mortgages held by a REMIC or a
grantor trust.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 1, 2005
Mr. Foley (for himself, Mr. Pomeroy, Mr. Shaw, Mr. Cantor, Mr. Tanner,
Mr. English of Pennsylvania, Ms. Harris, Mr. Holt, and Mr. Terry)
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 allow certain
modifications to be made to qualified mortgages held by a REMIC or a
grantor trust.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. CERTAIN MODIFICATIONS PERMITTED TO QUALIFIED MORTGAGES HELD
BY A REMIC OR A GRANTOR TRUST.
(a) Qualified Mortgages Held by a REMIC.--
(1) In general.--Paragraph (3) of section 860G(a) of the
Internal Revenue Code of 1986 is amended by adding at the end
the following new subparagraph:
``(C) Qualified modifications.--
``(i) In general.--An obligation shall not
fail to be treated as a qualified mortgage
solely because of a qualified modification of
such obligation.
``(ii) Qualified modification.--For
purposes of this section, the term `qualified
modification' means, with respect to any
obligation, any amendment, waiver, or other
modification which is treated as a disposition
of such obligation under section 1001 if such
amendment, waiver or other modification does
not--
``(I) extend the final maturity
date of the obligation,
``(II) increase the outstanding
principal balance under the obligation
(other than the capitalization of
accrued, unpaid interest),
``(III) result in a release of an
interest in real property securing the
obligation such that the obligation is
not principally secured by an interest
in real property (determined after
giving effect to the release), or
``(IV) result in an instrument or
property right which is not debt for
Federal income tax purposes.
``(iii) Defaults.--Under regulations
prescribed by the Secretary, any amendment,
waiver, or other modification of an obligation
which is in default or with respect to which
default is reasonably foreseeable may be
treated as a qualified modification for
purposes of this section.
``(iv) Defeasance with government
securities.--The requirements of clause
(ii)(III) shall be treated as satisfied if,
after the release described in such clause, the
obligation is principally secured by Government
securities and the amendment, waiver, or other
modification to such obligation satisfies such
requirements as the Secretary may prescribe.''.
(2) Exception from prohibited transaction rules.--
Subparagraph (A) of section 860F(a)(2) of such Code is amended
by striking ``or'' at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ``, or'', and by
adding at the end the following new clause:
``(v) a qualified modification (as defined
in section 860G(a)(3)(C)).''.
(3) Conforming amendments.--
(A) Section 860G(a)(3) of such Code is amended--
(i) by redesignating clauses (i) and (ii)
of subparagraph (A) as subclauses (I) and (II),
respectively,
(ii) by redesignating subparagraphs (A)
through (D) as clauses (i) through (iv),
respectively,
(iii) by striking ``The term'' and
inserting the following:
``(A) In general.--The term'', and
(iv) by striking ``For purposes of
subparagraph (A)'' and inserting the following:
``(B) Tenant-stockholders of cooperative housing
corporations.--For purposes of subparagraph (A)(i)''.
(B) Section 860G(a)(3)(A)(iv) of such Code (as
redesignated by subparagraph (A)) is amended--
(i) by striking ``clauses (i) and (ii) of
subparagraph (A)'' and inserting ``subclauses
(I) and (II) of clause (i)'', and
(ii) by striking ``subparagraph (A)
(without regard to such clauses)'' and
inserting ``clause (i) (without regard to such
subclauses)''.
(b) Qualified Mortgages Held by a Grantor Trust.--Section 672 of
the Internal Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(g) Special Rule for Certain Investment Trusts.--A grantor shall
not fail to be treated as the owner of any portion of a trust under
this subpart solely because such portion includes one or more
obligations with respect to which a qualified modification (within the
meaning of section 860G(a)(3)(C)) has been, or may be, made under the
terms of such trust.''.
(c) Effective Date.--The amendments made by this section shall
apply to amendments, waivers, and other modifications made after the
date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line