{"identifier":"/us/usc/t26/s143","title":26,"num":"\u00a7\u202f143.","heading":"Mortgage revenue bonds: qualified mortgage bond and qualified veterans\u2019 mortgage bond","text":"\u00a7\u202f143.\nMortgage revenue bonds: qualified mortgage bond and qualified veterans\u2019 mortgage bond\n(a)\nQualified mortgage bond\n(1)\nQualified mortgage bond defined\nFor purposes of this title, the term \u201cqualified mortgage bond\u201d means a bond which is issued as part of a qualified mortgage issue.\n(2)\nQualified mortgage issue defined\n(A)\nDefinition\nFor purposes of this title, the term \u201cqualified mortgage issue\u201d means an issue by a State or political subdivision thereof of 1 or more bonds, but only if\u2014\n(i) all proceeds of such issue (exclusive of issuance costs and a reasonably required reserve) are to be used to finance owner-occupied residences,\n(ii) such issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), (i), and (m)(7),\n(iii) such issue does not meet the private business tests of paragraphs (1) and (2) of section 141(b), and\n(iv) except as provided in subparagraph (D)(ii), repayments of principal on financing provided by the issue are used not later than the close of the 1st semiannual period beginning after the date the prepayment (or complete repayment) is received to redeem bonds which are part of such issue.\nClause (iv) shall not apply to amounts received within 10 years after the date of issuance of the issue (or, in the case of refunding bond, the date of issuance of the original bond).\n(B)\nGood faith effort to comply with mortgage eligibility requirements\nAn issue which fails to meet 1 or more of the requirements of subsections (c), (d), (e), (f), and (i) shall be treated as meeting such requirements if\u2014\n(i) the issuer in good faith attempted to meet all such requirements before the mortgages were executed,\n(ii) 95 percent or more of the proceeds devoted to owner-financing was devoted to residences with respect to which (at the time the mortgages were executed) all such requirements were met, and\n(iii) any failure to meet the requirements of such subsections is corrected within a reasonable period after such failure is first discovered.\n(C)\nGood faith effort to comply with other requirements\nAn issue which fails to meet 1 or more of the requirements of subsections (g), (h), and (m)(7) shall be treated as meeting such requirements if\u2014\n(i) the issuer in good faith attempted to meet all such requirements, and\n(ii) any failure to meet such requirements is due to inadvertent error after taking reasonable steps to comply with such requirements.\n(D)\nProceeds must be used within 42 months of date of issuance\n(i)\nIn general\nExcept as otherwise provided in this subparagraph, an issue shall not meet the requirement of subparagraph (A)(i) unless\u2014\n(I) all proceeds of the issue required to be used to finance owner-occupied residences are so used within the 42-month period beginning on the date of issuance of the issue (or, in the case of a refunding bond, within the 42-month period beginning on the date of issuance of the original bond) or, to the extent not so used within such period, are used within such period to redeem bonds which are part of such issue, and\n(II) no portion of the proceeds of the issue are used to make or finance any loan (other than a loan which is a nonpurpose investment within the meaning of section 148(f)(6)(A)) after the close of such period.\n(ii)\nException\nClause (i) (and clause (iv) of subparagraph (A)) shall not be construed to require amounts of less than $250,000 to be used to redeem bonds. The Secretary may by regulation treat related issues as 1 issue for purposes of the preceding sentence.\n(b)\nQualified veterans\u2019 mortgage bond defined\nFor purposes of this part, the term \u201cqualified veterans\u2019 mortgage bond\u201d means any bond\u2014\n(1) which is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide residences for veterans,\n(2) the payment of the principal and interest on which is secured by the general obligation of a State,\n(3) which is part of an issue which meets the requirements of subsections (c), (g), (i)(1), and (\nl\n(4) which is part of an issue which does not meet the private business tests of paragraphs (1) and (2) of section 141(b).\nRules similar to the rules of subparagraphs (B) and (C) of subsection (a)(2) shall apply to the requirements specified in paragraph (3) of this subsection.\n(c)\nResidence requirements\n(1)\nFor a residence\nA residence meets the requirements of this subsection only if\u2014\n(A) it is a single-family residence which can reasonably be expected to become the principal residence of the mortgagor within a reasonable time after the financing is provided, and\n(B) it is located within the jurisdiction of the authority issuing the bond.\n(2)\nFor an issue\nAn issue meets the requirements of this subsection only if all of the residences for which owner-financing is provided under the issue meet the requirements of paragraph (1).\n(d)\n3-year requirement\n(1)\nIn general\nAn issue meets the requirements of this subsection only if 95 percent or more of the net proceeds of such issue are used to finance the residences of mortgagors who had no present ownership interest in their principal residences at any time during the 3-year period ending on the date their mortgage is executed.\n(2)\nExceptions\nFor purposes of paragraph (1), the proceeds of an issue which are used to provide\u2014\n(A) financing with respect to targeted area residences,\n(B) qualified home improvement loans and qualified rehabilitation loans,\n(C) financing with respect to land described in subsection (i)(1)(C) and the construction of any residence thereon, and\n(D) in the case of bonds issued after the date of the enactment of this subparagraph, financing of any residence for a veteran (as defined in\nsection 101 of title 38\nshall be treated as used as described in paragraph (1).\n(3)\nMortgagor\u2019s interest in residence being financed\nFor purposes of paragraph (1), a mortgagor\u2019s interest in the residence with respect to which the financing is being provided shall not be taken into account.\n(e)\nPurchase price requirement\n(1)\nIn general\nAn issue meets the requirements of this subsection only if the acquisition cost of each residence the owner-financing of which is provided under the issue does not exceed 90 percent of the average area purchase price applicable to such residence.\n(2)\nAverage area purchase price\nFor purposes of paragraph (1), the term \u201caverage area purchase price\u201d means, with respect to any residence, the average purchase price of single family residences (in the statistical area in which the residence is located) which were purchased during the most recent 12-month period for which sufficient statistical information is available. The determination under the preceding sentence shall be made as of the date on which the commitment to provide the financing is made (or, if earlier, the date of the purchase of the residence).\n(3)\nSeparate application to new residences and old residences\nFor purposes of this subsection, the determination of average area purchase price shall be made separately with respect to\u2014\n(A) residences which have not been previously occupied, and\n(B) residences which have been previously occupied.\n(4)\nSpecial rule for 2 to 4 family residences\nFor purposes of this subsection, to the extent provided in regulations, the determination of average area purchase price shall be made separately with respect to 1 family, 2 family, 3 family, and 4 family residences.\n(5)\nSpecial rule for targeted area residences\nIn the case of a targeted area residence, paragraph (1) shall be applied by substituting \u201c110 percent\u201d for \u201c90 percent\u201d.\n(6)\nException for qualified home improvement loans\nParagraph (1) shall not apply with respect to any qualified home improvement loan.\n(f)\nIncome requirements\n(1)\nIn general\nAn issue meets the requirements of this subsection only if all owner-financing provided under the issue is provided for mortgagors whose family income is 115 percent or less of the applicable median family income.\n(2)\nDetermination of family income\nFor purposes of this subsection, the family income of mortgagors, and area median gross income, shall be determined by the Secretary after taking into account the regulations prescribed under section 8 of the United States Housing Act of 1937 (or, if such program is terminated, under such program as in effect immediately before such termination).\n(3)\nSpecial rule for applying paragraph (1) in the case of targeted area residences\nIn the case of any financing provided under any issue for targeted area residences\u2014\n(A) \u2153 of the amount of such financing may be provided without regard to paragraph (1), and\n(B) paragraph (1) shall be treated as satisfied with respect to the remainder of the owner financing if the family income of the mortgagor is 140 percent or less of the applicable median family income.\n(4)\nApplicable median family income\nFor purposes of this subsection, the term \u201capplicable median family income\u201d means, with respect to a residence, whichever of the following is the greater:\n(A) the area median gross income for the area in which such residence is located, or\n(B) the statewide median gross income for the State in which such residence is located.\n(5)\nAdjustment of income requirement based on relation of high housing costs to income\n(A)\nIn general\nIf the residence (for which financing is provided under the issue) is located in a high housing cost area and the limitation determined under this paragraph is greater than the limitation otherwise applicable under paragraph (1), there shall be substituted for the income limitation in paragraph (1), a limitation equal to the percentage determined under subparagraph (B) of the area median gross income for such area.\n(B)\nIncome requirements for residences in high housing cost area\nThe percentage determined under this subparagraph for a residence located in a high housing cost area is the percentage (not greater than 140 percent) equal to the product of\u2014\n(I) 115 percent, and\n(II) the amount by which the housing cost/income ratio for such area exceeds 0.2.\n(C)\nHigh housing cost areas\nFor purposes of this paragraph, the term \u201chigh housing cost area\u201d means any statistical area for which the housing cost/income ratio is greater than 1.2.\n(D)\nHousing cost/income ratio\nFor purposes of this paragraph\u2014\n(i)\nIn general\nThe term \u201chousing cost/income ratio\u201d means, with respect to any statistical area, the number determined by dividing\u2014\n(I) the applicable housing price ratio for such area, by\n(II) the ratio which the area median gross income for such area bears to the median gross income for the United States.\n(ii)\nApplicable housing price ratio\nFor purposes of clause (i), the applicable housing price ratio for any area is the new housing price ratio or the existing housing price ratio, whichever results in the housing cost/income ratio being closer to 1.\n(iii)\nNew housing price ratio\nThe new housing price ratio for any area is the ratio which\u2014\n(I) the average area purchase price (as defined in subsection (e)(2)) for residences described in subsection (e)(3)(A) which are located in such area bears to\n(II) the average purchase price (determined in accordance with the principles of subsection (e)(2)) for residences so described which are located in the United States.\n(iv)\nExisting housing price ratio\nThe existing housing price ratio for any area is the ratio determined in accordance with clause (iii) but with respect to residences described in subsection (e)(3)(B).\n(6)\nAdjustment to income requirements based on family size\nIn the case of a mortgagor having a family of fewer than 3 individuals, the preceding provisions of this subsection shall be applied by substituting\u2014\n(A) \u201c100 percent\u201d for \u201c115 percent\u201d each place it appears, and\n(B) \u201c120 percent\u201d for \u201c140 percent\u201d each place it appears.\n(g)\nRequirements related to arbitrage\n(1)\nIn general\nAn issue meets the requirements of this subsection only if such issue meets the requirements of paragraph (2) of this subsection and, in the case of an issue described in subsection (b)(1), such issue also meets the requirements of paragraph (3) of this subsection. Such requirements shall be in addition to the requirements of section 148.\n(2)\nEffective rate of mortgage interest cannot exceed bond yield by more than 1.125 percentage points\n(A)\nIn general\nAn issue shall be treated as meeting the requirements of this paragraph only if the excess of\u2014\n(i) the effective rate of interest on the mortgages provided under the issue, over\n(ii) the yield on the issue,\nis not greater than 1.125 percentage points.\n(B)\nEffective rate of mortgage interest\n(i)\nIn general\nIn determining the effective rate of interest on any mortgage for purposes of this paragraph, there shall be taken into account all fees, charges, and other amounts borne by the mortgagor which are attributable to the mortgage or to the bond issue.\n(ii)\nSpecification of some of the amounts to be treated as borne by the mortgagor\nFor purposes of clause (i), the following items (among others) shall be treated as borne by the mortgagor:\n(I) all points or similar charges paid by the seller of the property, and\n(II) the excess of the amounts received from any person other than the mortgagor by any person in connection with the acquisition of the mortgagor\u2019s interest in the property over the usual and reasonable acquisition costs of a person acquiring like property where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans\u2019 mortgage bonds.\n(iii)\nSpecification of some of the amounts to be treated as not borne by the mortgagor\nFor purposes of clause (i), the following items shall not be taken into account:\n(I) any expected rebate of arbitrage profits, and\n(II) any application fee, survey fee, credit report fee, insurance charge, or similar amount to the extent such amount does not exceed amounts charged in such area in cases where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans\u2019 mortgage bonds.\nSubclause (II) shall not apply to origination fees, points, or similar amounts.\n(iv)\nPrepayment assumptions\nIn determining the effective rate of interest\u2014\n(I) it shall be assumed that the mortgage prepayment rate will be the rate set forth in the most recent applicable mortgage maturity experience table published by the Federal Housing Administration, and\n(II) prepayments of principal shall be treated as received on the last day of the month in which the issuer reasonably expects to receive such prepayments.\nThe Secretary may by regulation adjust the mortgage prepayment rate otherwise used in determining the effective rate of interest to the extent the Secretary determines that such an adjustment is appropriate by reason of the impact of subsection (m).\n(C)\nYield on the issue\nFor purposes of this subsection, the yield on an issue shall be determined on the basis of\u2014\n(i) the issue price (within the meaning of sections 1273 and 1274), and\n(ii) an expected maturity for the bonds which is consistent with the assumptions required under subparagraph (B)(iv).\n(3)\nArbitrage and investment gains to be used to reduce costs of owner-financing\n(A)\nIn general\nAn issue shall be treated as meeting the requirements of this paragraph only if an amount equal to the sum of\u2014\n(i) the excess of\u2014\n(I) the amount earned on all nonpurpose investments (other than investments attributable to an excess described in this clause), over\n(II) the amount which would have been earned if such investments were invested at a rate equal to the yield on the issue, plus\n(ii) any income attributable to the excess described in clause (i),\nis paid or credited to the mortgagors as rapidly as may be practicable.\n(B)\nInvestment gains and losses\nFor purposes of subparagraph (A), in determining the amount earned on all nonpurpose investments, any gain or loss on the disposition of such investments shall be taken into account.\n(C)\nReduction where issuer does not use full 1.125 percentage points under paragraph (2)\n(i)\nIn general\nThe amount required to be paid or credited to mortgagors under subparagraph (A) (determined under this paragraph without regard to this subparagraph) shall be reduced by the unused paragraph (2) amount.\n(ii)\nUnused paragraph (2) amount\nFor purposes of clause (i), the unused paragraph (2) amount is the amount which (if it were treated as an interest payment made by mortgagors) would result in the excess referred to in paragraph (2)(A) being equal to 1.125 percentage points. Such amount shall be fixed and determined as of the yield determination date.\n(D)\nElection to pay United States\nSubparagraph (A) shall be satisfied with respect to any issue if the issuer elects before issuing the bonds to pay over to the United States\u2014\n(i) not less frequently than once each 5 years after the date of issue, an amount equal to 90 percent of the aggregate amount which would be required to be paid or credited to mortgagors under subparagraph (A) (and not theretofore paid to the United States), and\n(ii) not later than 60 days after the redemption of the last bond, 100 percent of such aggregate amount not theretofore paid to the United States.\n(E)\nSimplified accounting\nThe Secretary shall permit any simplified system of accounting for purposes of this paragraph which the issuer establishes to the satisfaction of the Secretary will assure that the purposes of this paragraph are carried out.\n(F)\nNonpurpose investment\nFor purposes of this paragraph, the term \u201cnonpurpose investment\u201d has the meaning given such term by section 148(f)(6)(A).\n(h)\nPortion of loans required to be placed in targeted areas\n(1)\nIn general\nAn issue meets the requirements of this subsection only if at least 20 percent of the proceeds of the issue which are devoted to providing owner-financing is made available (with reasonable diligence) for owner-financing of targeted area residences for at least 1 year after the date on which owner-financing is first made available with respect to targeted area residences.\n(2)\nLimitation\nNothing in paragraph (1) shall be treated as requiring the making available of an amount which exceeds 40 percent of the average annual aggregate principal amount of mortgages executed during the immediately preceding 3 calendar years for single-family, owner-occupied residences located in targeted areas within the jurisdiction of the issuing authority.\n(i)\nOther requirements\n(1)\nMortgages must be new mortgages\n(A)\nIn general\nAn issue meets the requirements of this subsection only if no part of the proceeds of such issue is used to acquire or replace existing mortgages.\n(B)\nExceptions\nUnder regulations prescribed by the Secretary, the replacement of\u2014\n(i) construction period loans,\n(ii) bridge loans or similar temporary initial financing, and\n(iii) in the case of a qualified rehabilitation, an existing mortgage,\nshall not be treated as the acquisition or replacement of an existing mortgage for purposes of subparagraph (A).\n(C)\nException for certain contract for deed agreements\n(i)\nIn general\nIn the case of land possessed under a contract for deed by a mortgagor\u2014\n(I) whose principal residence (within the meaning of section 121) is located on such land, and\n(II) whose family income (as defined in subsection (f)(2)) is not more than 50 percent of applicable median family income (as defined in subsection (f)(4)),\nthe contract for deed shall not be treated as an existing mortgage for purposes of subparagraph (A).\n(ii)\nContract for deed defined\nFor purposes of this subparagraph, the term \u201ccontract for deed\u201d means a seller-financed contract for the conveyance of land under which\u2014\n(I) legal title does not pass to the purchaser until the consideration under the contract is fully paid to the seller, and\n(II) the seller\u2019s remedy for nonpayment is forfeiture rather than judicial or nonjudicial foreclosure.\n(2)\nCertain requirements must be met where mortgage is assumed\nAn issue meets the requirements of this subsection only if each mortgage with respect to which owner-financing has been provided under such issue may be assumed only if the requirements of subsections (c), (d), and (e), and the requirements of paragraph (1) or (3)(B) of subsection (f) (whichever applies), are met with respect to such assumption.\n(j)\nTargeted area residences\n(1)\nIn general\nFor purposes of this section, the term \u201ctargeted area residence\u201d means a residence in an area which is either\u2014\n(A) a qualified census tract, or\n(B) an area of chronic economic distress.\n(2)\nQualified census tract\n(A)\nIn general\nFor purposes of paragraph (1), the term \u201cqualified census tract\u201d means a census tract in which 70 percent or more of the families have income which is 80 percent or less of the statewide median family income.\n(B)\nData used\nThe determination under subparagraph (A) shall be made on the basis of the most recent decennial census for which data are available.\n(3)\nArea of chronic economic distress\n(A)\nIn general\nFor purposes of paragraph (1), the term \u201carea of chronic economic distress\u201d means an area of chronic economic distress\u2014\n(i) designated by the State as meeting the standards established by the State for purposes of this subsection, and\n(ii) the designation of which has been approved by the Secretary and the Secretary of Housing and Urban Development.\n(B)\nCriteria to be used in approving State designations\nThe criteria used by the Secretary and the Secretary of Housing and Urban Development in evaluating any proposed designation of an area for purposes of this subsection shall be\u2014\n(i) the condition of the housing stock, including the age of the housing and the number of abandoned and substandard residential units,\n(ii) the need of area residents for owner-financing under this section, as indicated by low per capita income, a high percentage of families in poverty, a high number of welfare recipients, and high unemployment rates,\n(iii) the potential for use of owner-financing under this section to improve housing conditions in the area, and\n(iv) the existence of a housing assistance plan which provides a displacement program and a public improvements and services program.\n(k)\nOther definitions and special rules\nFor purposes of this section\u2014\n(1)\nMortgage\nThe term \u201cmortgage\u201d means any owner-financing.\n(2)\nStatistical area\n(A)\nIn general\nThe term \u201cstatistical area\u201d means\u2014\n(i) a metropolitan statistical area, and\n(ii) any county (or the portion thereof) which is not within a metropolitan statistical area.\n(B)\nMetropolitan statistical area\nThe term \u201cmetropolitan statistical area\u201d includes the area defined as such by the Secretary of Commerce.\n(C)\nDesignation where adequate statistical information not available\nFor purposes of this paragraph, if there is insufficient recent statistical information with respect to a county (or portion thereof) described in subparagraph (A)(ii), the Secretary may substitute for such county (or portion thereof) another area for which there is sufficient recent statistical information.\n(D)\nDesignation where no county\nIn the case of any portion of a State which is not within a county, subparagraphs (A)(ii) and (C) shall be applied by substituting for \u201ccounty\u201d an area designated by the Secretary which is the equivalent of a county.\n(3)\nAcquisition cost\n(A)\nIn general\nThe term \u201cacquisition cost\u201d means the cost of acquiring the residence as a completed residential unit.\n(B)\nExceptions\nThe term \u201cacquisition cost\u201d does not include\u2014\n(i) usual and reasonable settlement or financing costs,\n(ii) the value of services performed by the mortgagor or members of his family in completing the residence, and\n(iii) the cost of land (other than land described in subsection (i)(1)(C)(i)) which has been owned by the mortgagor for at least 2 years before the date on which construction of the residence begins.\n(C)\nSpecial rule for qualified rehabilitation loans\nIn the case of a qualified rehabilitation loan, for purposes of subsection (e), the term \u201cacquisition cost\u201d includes the cost of the rehabilitation.\n(4)\nQualified home improvement loan\nThe term \u201cqualified home improvement loan\u201d means the financing (in an amount which does not exceed $15,000)\u2014\n(A) of alterations, repairs, and improvements on or in connection with an existing residence by the owner thereof, but\n(B) only of such items as substantially protect or improve the basic livability or energy efficiency of the property.\n(5)\nQualified rehabilitation loan\n(A)\nIn general\nThe term \u201cqualified rehabilitation loan\u201d means any owner-financing provided in connection with\u2014\n(i) a qualified rehabilitation, or\n(ii) the acquisition of a residence with respect to which there has been a qualified rehabilitation,\nbut only if the mortgagor to whom such financing is provided is the first resident of the residence after the completion of the rehabilitation.\n(B)\nQualified rehabilitation\nFor purposes of subparagraph (A), the term \u201cqualified rehabilitation\u201d means any rehabilitation of a building if\u2014\n(i) there is a period of at least 20 years between the date on which the building was first used and the date on which the physical work on such rehabilitation begins,\n(ii) in the rehabilitation process\u2014\n(I) 50 percent or more of the existing external walls of such building are retained in place as external walls,\n(II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and\n(III) 75 percent or more of the existing internal structural framework of such building is retained in place, and\n(iii) the expenditures for such rehabilitation are 25 percent or more of the mortgagor\u2019s adjusted basis in the residence.\nFor purposes of clause (iii), the mortgagor\u2019s adjusted basis shall be determined as of the completion of the rehabilitation or, if later, the date on which the mortgagor acquires the residence.\n(6)\nDeterminations on actuarial basis\nAll determinations of yield, effective interest rates, and amounts required to be paid or credited to mortgagors or paid to the United States under subsection (g) shall be made on an actuarial basis taking into account the present value of money.\n(7)\nSingle-family and owner-occupied residences include certain residences with 2 to 4 units\nExcept for purposes of subsection (h)(2), the terms \u201csingle-family\u201d and \u201cowner-occupied\u201d, when used with respect to residences, include 2, 3, or 4 family residences\u2014\n(A) one unit of which is occupied by the owner of the units, and\n(B) which were first occupied at least 5 years before the mortgage is executed.\nSubparagraph (B) shall not apply to any 2-family residence if the residence is a targeted area residence and the family income of the mortgagor meets the requirement of subsection (f)(3)(B).\n(8)\nCooperative housing corporations\n(A)\nIn general\nIn the case of any cooperative housing corporation\u2014\n(i) each dwelling unit shall be treated as if it were actually owned by the person entitled to occupy such dwelling unit by reason of his ownership of stock in the corporation, and\n(ii) any indebtedness of the corporation allocable to the dwelling unit shall be treated as if it were indebtedness of the shareholder entitled to occupy the dwelling unit.\n(B)\nAdjustment to targeted area requirement\nIn the case of any issue to provide financing to a cooperative housing corporation with respect to cooperative housing not located in a targeted area, to the extent provided in regulations, such issue may be combined with 1 or more other issues for purposes of determining whether the requirements of subsection (h) are met.\n(C)\nCooperative housing corporation\nThe term \u201ccooperative housing corporation\u201d has the meaning given to such term by section 216(b)(1).\n(9)\nTreatment of limited equity cooperative housing\n(A)\nTreatment as residential rental property\nExcept as provided in subparagraph (B), for purposes of this part\u2014\n(i) any limited equity cooperative housing shall be treated as residential rental property and not as owner-occupied housing, and\n(ii) bonds issued to provide such housing shall be subject to the same requirements and limitations as bonds the proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)).\n(B)\nBonds subject to qualified mortgage bond termination date\nSubparagraph (A) shall not apply to any bond issued after the date specified in subsection (a)(1)(B).\n(C)\nLimited equity cooperative housing\nFor purposes of this paragraph, the term \u201climited equity cooperative housing\u201d means any dwelling unit which a person is entitled to occupy by reason of his ownership of stock in a qualified cooperative housing corporation.\n(D)\nQualified cooperative housing corporation\nFor purposes of this paragraph, the term \u201cqualified cooperative housing corporation\u201d means any cooperative housing corporation (as defined in section 216(b)(1)) if\u2014\n(i) the consideration paid for stock held by any stockholder entitled to occupy any house or apartment in a building owned or leased by the corporation may not exceed the sum of\u2014\n(I) the consideration paid for such stock by the first such stockholder, as adjusted by a cost-of-living adjustment determined by the Secretary,\n(II) payments made by any stockholder for improvements to such house or apartment, and\n(III) payments (other than amounts taken into account under subclause (I) or (II)) attributable to any stockholder to amortize the principal of the corporation\u2019s indebtedness arising from the acquisition or development of real property, including improvements thereof,\n(ii) the value of the corporation\u2019s assets (reduced by any corporate liabilities), to the extent such value exceeds the combined transfer values of the outstanding corporate stock, shall be used only for public benefit or charitable purposes, or directly to benefit the corporation itself, and shall not be used directly to benefit any stockholder, and\n(iii) at the time of issuance of the issue, such corporation makes an election under this paragraph.\n(E)\nEffect of election\nIf a cooperative housing corporation makes an election under this paragraph, section 216 shall not apply with respect to such corporation (or any successor thereof) during the qualified project period (as defined in section 142(d)(2)).\n(F)\nCorporation must continue to be qualified cooperative\nSubparagraph (A)(i) shall not apply to limited equity cooperative housing unless the cooperative housing corporation continues to be a qualified cooperative housing corporation at all times during the qualified project period (as defined in section 142(d)(2)).\n(G)\nElection irrevocable\nAny election under this paragraph, once made, shall be irrevocable.\n(10)\nTreatment of resale price control and subsidy lien programs\n(A)\nIn general\nIn the case of a residence which is located in a high housing cost area (as defined in section 143(f)(5)), the interest of a governmental unit in such residence by reason of financing provided under any qualified program shall not be taken into account under this section (other than subsection (m)), and the acquisition cost of the residence which is taken into account under subsection (e) shall be such cost reduced by the amount of such financing.\n(B)\nQualified program\nFor purposes of subparagraph (A), the term \u201cqualified program\u201d means any governmental program providing mortgage loans (other than 1st mortgage loans) or grants\u2014\n(i) which restricts (throughout the 9-year period beginning on the date the financing is provided) the resale of the residence to a purchaser qualifying under this section and to a price determined by an index that reflects less than the full amount of any appreciation in the residence\u2019s value, or\n(ii) which provides for deferred or reduced interest payments on such financing and grants the governmental unit a share in the appreciation of the residence,\nbut only if such financing is not provided directly or indirectly through the use of any tax-exempt private activity bond.\n(11)\nSpecial rules for residences located in disaster areas\nIn the case of a residence located in an area determined by the President to warrant assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (as in effect on the date of the enactment of the Taxpayer Relief Act of 1997), this section shall be applied with the following modifications to financing provided with respect to such residence within 2 years after the date of the disaster declaration:\n(A) Subsection (d) (relating to 3-year requirement) shall not apply.\n(B) Subsections (e) and (f) (relating to purchase price requirement and income requirement) shall be applied as if such residence were a targeted area residence.\nThe preceding sentence shall apply only with respect to bonds issued after\nMay 1, 2008\nJanuary 1, 2010\n(12)\nSpecial rules for subprime refinancings\n(A)\nIn general\nNotwithstanding the requirements of subsection (i)(1), the proceeds of a qualified mortgage issue may be used to refinance a mortgage on a residence which was originally financed by the mortgagor through a qualified subprime loan.\n(B)\nSpecial rules\nIn applying subparagraph (A) to any refinancing\u2014\n(i) subsection (a)(2)(D)(i) shall be applied by substituting \u201c12-month period\u201d for \u201c42-month period\u201d each place it appears,\n(ii) subsection (d) (relating to 3-year requirement) shall not apply, and\n(iii) 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.\n(C)\nQualified subprime loan\nThe term \u201cqualified subprime loan\u201d means an adjustable rate single-family residential mortgage loan made after\nDecember 31, 2001\nJanuary 1, 2008\n(D)\nTermination\nThis paragraph shall not apply to any bonds issued after\nDecember 31, 2010\n(13)\nSpecial rules for residences destroyed in federally declared disasters\n(A)\nPrincipal residence destroyed\nAt the election of the taxpayer, if the principal residence (within the meaning of section 121) of such taxpayer is\u2014\n(i) rendered unsafe for use as a residence by reason of a federally declared disaster occurring before\nJanuary 1, 2010\n(ii) demolished or relocated by reason of an order of the government of a State or political subdivision thereof on account of a federally declared disaster occurring before such date,\nthen, for the 2-year period beginning on the date of the disaster declaration, subsection (d)(1) shall not apply with respect to such taxpayer and subsection (e) shall be applied by substituting \u201c110\u201d for \u201c90\u201d in paragraph (1) thereof.\n(B)\nPrincipal residence damaged\n(i)\nIn general\nAt the election of the taxpayer, if the principal residence (within the meaning of section 121) of such taxpayer was damaged as the result of a federally declared disaster occurring before\nJanuary 1, 2010\n(ii)\nLimitation\nThe aggregate owner-financing to which clause (i) applies shall not exceed the lesser of\u2014\n(I) the cost of such repair or reconstruction, or\n(II) $150,000.\n(C)\nFederally declared disaster\nFor purposes of this paragraph, the term \u201cfederally declared disaster\u201d has the meaning given such term by section 165(h)(3)(C)(i).\n1\n1 See References in Text note below.\n(D)\nElection; denial of double benefit\n(i)\nElection\nAn election under this paragraph may not be revoked except with the consent of the Secretary.\n(ii)\nDenial of double benefit\nIf a taxpayer elects the application of this paragraph, paragraph (11) shall not apply with respect to the purchase or financing of any residence by such taxpayer.\n(l)\nAdditional requirements for qualified veterans\u2019 mortgage bonds\nAn issue meets the requirements of this subsection only if it meets the requirements of paragraphs (1), (2), and (3).\n(1)\nVeterans to whom financing may be provided\nAn issue meets the requirements of this paragraph only if each mortgagor to whom financing is provided under the issue is a qualified veteran.\n(2)\nRequirement that State program be in effect before June 22, 1984\nAn issue meets the requirements of this paragraph only if it is a general obligation of a State which issued qualified veterans\u2019 mortgage bonds before\nJune 22, 1984\n(3)\nVolume limitation\n(A)\nIn general\nAn issue meets the requirements of this paragraph only if the aggregate amount of bonds issued pursuant thereto (when added to the aggregate amount of qualified veterans\u2019 mortgage bonds previously issued by the State during the calendar year) does not exceed the State veterans limit for such calendar year.\n(B)\nState veterans limit\n(i)\nIn general\nIn the case of any State to which clause (ii) does not apply, the State veterans limit for any calendar year is the amount equal to\u2014\n(I) the aggregate amount of qualified veterans bonds issued by such State during the period beginning on\nJanuary 1, 1979\nJune 22, 1984\n(II) the number (not to exceed 5) of calendar years after 1979 and before 1985 during which the State issued qualified veterans bonds (determined by only taking into account bonds issued on or before\nJune 22, 1984\n(ii)\nAlaska, Oregon, and Wisconsin\nIn the case of the following States, the State veterans limit for any calendar year is the amount equal to\u2014\n(I) $100,000,000 for the State of Alaska,\n(II) $100,000,000 for the State of Oregon, and\n(III) $100,000,000 for the State of Wisconsin.\n(iii)\nPhasein\nIn the case of calendar years beginning before 2010, clause (ii) shall be applied by substituting for each of the dollar amounts therein an amount equal to the applicable percentage of such dollar amount. For purposes of the preceding sentence, the applicable percentage shall be determined in accordance with the following table:\nFor Calendar Year:\nApplicable percentage is:\n2006\n20 percent\n2007\n40 percent\n2008\n60 percent\n2009\n80 percent.\n(C)\nTreatment of refunding issues\n(i)\nIn general\nFor purposes of subparagraph (A), the term \u201cqualified veterans\u2019 mortgage bond\u201d shall not include any bond issued to refund another bond but only if the maturity date of the refunding bond is not later than the later of\u2014\n(I) the maturity date of the bond to be refunded, or\n(II) the date 32 years after the date on which the refunded bond was issued (or in the case of a series of refundings, the date on which the original bond was issued).\nThe preceding sentence shall apply only to the extent that the amount of the refunding bond does not exceed the outstanding amount of the refunded bond.\n(ii)\nException for advance refunding\nClause (i) shall not apply to any bond issued to advance refund another bond.\n(4)\nQualified veteran\nFor purposes of this subsection, the term \u201cqualified veteran\u201d means any veteran who\u2014\n(A) served on active duty, and\n(B) applied for the financing before the date 25 years after the last date on which such veteran left active service.\n(5)\nSpecial rule for certain short-term bonds\nIn the case of any bond\u2014\n(A) which has a term of 1 year or less,\n(B) which is authorized to be issued under O.R.S. 407.435 (as in effect on the date of the enactment of this subsection), to provide financing for property taxes, and\n(C) which is redeemed at the end of such term,\nthe amount taken into account under this subsection with respect to such bond shall be\n1\n15\n(m)\nRecapture of portion of Federal subsidy from use of qualified mortgage bonds and mortgage credit certificates\n(1)\nIn general\nIf, during the taxable year, any taxpayer disposes of an interest in a residence with respect to which there is or was any federally-subsidized indebtedness for the payment of which the taxpayer was liable in whole or part, then the taxpayer\u2019s tax imposed by this chapter for such taxable year shall be increased by the lesser of\u2014\n(A) the recapture amount with respect to such indebtedness, or\n(B) 50 percent of the gain (if any) on the disposition of such interest.\n(2)\nExceptions\nParagraph (1) shall not apply to\u2014\n(A) any disposition by reason of death, and\n(B) any disposition which is more than 9 years after the testing date.\n(3)\nFederally-subsidized indebtedness\nFor purposes of this subsection\u2014\n(A)\nIn general\nThe term \u201cfederally-subsidized indebtedness\u201d means any indebtedness if\u2014\n(i) financing for the indebtedness was provided in whole or part from the proceeds of any tax-exempt qualified mortgage bond, or\n(ii) any credit was allowed under section 25 (relating to interest on certain home mortgages) to the taxpayer for interest paid or incurred on such indebtedness.\n(B)\nException for home improvement loans\nSuch term shall not include any indebtedness to the extent such indebtedness is federally-subsidized indebtedness solely by reason of being a qualified home improvement loan (as defined in subsection (k)(4)).\n(4)\nRecapture amount\nFor purposes of this subsection\u2014\n(A)\nIn general\nThe recapture amount with respect to any indebtedness is the amount equal to the product of\u2014\n(i) the federally-subsidized amount with respect to the indebtedness,\n(ii) the holding period percentage, and\n(iii) the income percentage.\n(B)\nFederally-subsidized amount\nThe federally-subsidized amount with respect to any indebtedness is the amount equal to 6.25 percent of the highest principal amount of the indebtedness for which the taxpayer was liable.\n(C)\nHolding period percentage\n(i)\nIn general\nThe term \u201cholding period percentage\u201d means the percentage determined in accordance with the following table:\nIf the disposition occurs during a year after the testing date which is:\nThe holding period percentage is:\nThe 1st such year\n20\nThe 2d such year\n40\nThe 3d such year\n60\nThe 4th such year\n80\nThe 5th such year\n100\nThe 6th such year\n80\nThe 7th such year\n60\nThe 8th such year\n40\nThe 9th such year\n20.\n(ii)\nRetirements of indebtedness\nIf the federally-subsidized indebtedness is completely repaid during any year of the 4-year period beginning on the testing date, the holding period percentage for succeeding years shall be determined by reducing ratably to zero over the succeeding 5 years the holding period percentage which would have been determined under this subparagraph had the taxpayer disposed of his interest in the residence on the date of the repayment.\n(D)\nTesting date\nThe term \u201ctesting date\u201d means the earliest date on which all of the following requirements are met:\n(i) The indebtedness is federally-subsidized indebtedness.\n(ii) The taxpayer is liable in whole or part for payment of the indebtedness.\n(E)\nIncome percentage\nThe term \u201cincome percentage\u201d means the percentage (but not greater than 100 percent) which\u2014\n(i) the excess of\u2014\n(I) the modified adjusted gross income of the taxpayer for the taxable year in which the disposition occurs, over\n(II) the adjusted qualifying income for such taxable year, bears to\n(ii) $5,000.\nThe percentage determined under the preceding sentence shall be rounded to the nearest whole percentage point (or, if it includes a half of a percentage point, shall be increased to the nearest whole percentage point).\n(5)\nAdjusted qualifying income; modified adjusted gross income\n(A)\nAdjusted qualifying income\nFor purposes of paragraph (4), the term \u201cadjusted qualifying income\u201d means the product of\u2014\n(i) the highest family income which (as of the date the financing was provided) would have met the requirements of subsection (f) with respect to the residents, and\n(ii) 1.05 to the nth power where \u201cn\u201d equals the number of full years during the period beginning on the date the financing was provided and ending on the date of the disposition.\nFor purposes of clause (i), highest family income shall be determined without regard to subsection (f)(3)(A) and on the basis of the number of members of the taxpayer\u2019s family as of the date of the disposition.\n(B)\nModified adjusted gross income\nFor purposes of paragraph (4), the term \u201cmodified adjusted gross income\u201d means adjusted gross income\u2014\n(i) increased by the amount of interest received or accrued by the taxpayer during the taxable year which is excluded from gross income under section 103, and\n(ii) decreased by the amount of gain (if any) included in gross income of the taxpayer by reason of the disposition to which this subsection applies.\n(6)\nSpecial rules relating to limitation on recapture amount based on gain realized\n(A)\nIn general\nFor purposes of paragraph (1), gain shall be taken into account whether or not recognized, and the adjusted basis of the taxpayer\u2019s interest in the residence shall be determined without regard to sections 1033(b) and 1034(e) (as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) for purposes of determining gain.\n(B)\nDispositions other than sales, exchanges, and involuntary conversions\nIn the case of a disposition other than a sale, exchange, or involuntary conversion, gain shall be determined as if the interest had been sold for its fair market value.\n(C)\nInvoluntary conversions resulting from casualties\nIn the case of property which (as a result of its destruction in whole or in part by fire, storm, or other casualty) is compulsorily or involuntarily converted, paragraph (1) shall not apply to such conversion if the taxpayer purchases (during the period specified in section 1033(a)(2)(B)) property for use as his principal residence on the site of the converted property. For purposes of subparagraph (A), the adjusted basis of the taxpayer in the residence shall not be adjusted for any gain or loss on a conversion to which this subparagraph applies.\n(7)\nIssuer to inform mortgagor of federally-subsidized amount and family income limits\nThe issuer of the issue which provided the federally-subsidized indebtedness to the mortgagor shall\u2014\n(A) at the time of settlement, provide a written statement informing the mortgagor of the potential recapture under this subsection, and\n(B) not later than 90 days after the date such indebtedness is provided, provide a written statement to the mortgagor specifying\u2014\n(i) the federally-subsidized amount with respect to such indebtedness, and\n(ii) the adjusted qualifying income (as defined in paragraph (5)) for each category of family size for each year of the 9-year period beginning on the date the financing was provided.\n(8)\nSpecial rules\n(A)\nNo basis adjustment\nNo adjustment shall be made to the basis of any property for the increase in tax under this subsection.\n(B)\nSpecial rule where 2 or more persons hold interests in residence\nExcept as provided in subparagraph (C) and in regulations prescribed by the Secretary, if 2 or more persons hold interests in any residence and are jointly liable for the federally-subsidized indebtedness, the recapture amount shall be determined separately with respect to their respective interests in the residence.\n(C)\nTransfers to spouses and former spouses\nParagraph (1) shall not apply to any transfer on which no gain or loss is recognized under section 1041. In any such case, the transferee shall be treated under this subsection in the same manner as the transferor would have been treated had such transfer not occurred.\n(D)\nRegulations\nThe Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subsection, including regulations dealing with dispositions of partial interests in a residence.","url":"https://projectusc.org/usc/t26/s143.html","content":[{"t":"sec","id":"/us/usc/t26/s143","children":[{"t":"num","text":"\u00a7\u202f143."},{"t":"heading","text":"Mortgage revenue bonds: qualified mortgage bond and qualified veterans\u2019 mortgage bond"},{"t":"subsec","id":"/us/usc/t26/s143/a","children":[{"t":"num","text":"(a)"},{"t":"heading","text":"Qualified mortgage bond"},{"t":"para","id":"/us/usc/t26/s143/a/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Qualified mortgage bond defined"},{"t":"content","children":[{"t":"p","text":"For purposes of this title, the term \u201cqualified mortgage bond\u201d means a bond which is issued as part of a qualified mortgage issue.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/a/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Qualified mortgage issue defined"},{"t":"subpara","id":"/us/usc/t26/s143/a/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Definition"},{"t":"chapeau","text":"For purposes of this title, the term \u201cqualified mortgage issue\u201d means an issue by a State or political subdivision thereof of 1 or more bonds, but only if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/a/2/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" all proceeds of such issue (exclusive of issuance costs and a reasonably required reserve) are to be used to finance owner-occupied residences,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" such issue meets the requirements of subsections (c), (d), (e), (f), (g), (h), (i), and (m)(7),","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/A/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" such issue does not meet the private business tests of paragraphs (1) and (2) of section 141(b), and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/A/iv","children":[{"t":"num","text":"(iv)"},{"t":"content","text":" except as provided in subparagraph (D)(ii), repayments of principal on financing provided by the issue are used not later than the close of the 1st semiannual period beginning after the date the prepayment (or complete repayment) is received to redeem bonds which are part of such issue.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"Clause (iv) shall not apply to amounts received within 10 years after the date of issuance of the issue (or, in the case of refunding bond, the date of issuance of the original bond).","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/a/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Good faith effort to comply with mortgage eligibility requirements"},{"t":"chapeau","text":"An issue which fails to meet 1 or more of the requirements of subsections (c), (d), (e), (f), and (i) shall be treated as meeting such requirements if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/a/2/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the issuer in good faith attempted to meet all such requirements before the mortgages were executed,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" 95 percent or more of the proceeds devoted to owner-financing was devoted to residences with respect to which (at the time the mortgages were executed) all such requirements were met, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" any failure to meet the requirements of such subsections is corrected within a reasonable period after such failure is first discovered.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/a/2/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Good faith effort to comply with other requirements"},{"t":"chapeau","text":"An issue which fails to meet 1 or more of the requirements of subsections (g), (h), and (m)(7) shall be treated as meeting such requirements if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/a/2/C/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the issuer in good faith attempted to meet all such requirements, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" any failure to meet such requirements is due to inadvertent error after taking reasonable steps to comply with such requirements.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/a/2/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Proceeds must be used within 42 months of date of issuance"},{"t":"clause","id":"/us/usc/t26/s143/a/2/D/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"Except as otherwise provided in this subparagraph, an issue shall not meet the requirement of subparagraph (A)(i) unless\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/a/2/D/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" all proceeds of the issue required to be used to finance owner-occupied residences are so used within the 42-month period beginning on the date of issuance of the issue (or, in the case of a refunding bond, within the 42-month period beginning on the date of issuance of the original bond) or, to the extent not so used within such period, are used within such period to redeem bonds which are part of such issue, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/a/2/D/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" no portion of the proceeds of the issue are used to make or finance any loan (other than a loan which is a nonpurpose investment within the meaning of section 148(f)(6)(A)) after the close of such period.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/a/2/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Exception"},{"t":"content","children":[{"t":"p","text":"Clause (i) (and clause (iv) of subparagraph (A)) shall not be construed to require amounts of less than $250,000 to be used to redeem bonds. The Secretary may by regulation treat related issues as 1 issue for purposes of the preceding sentence.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/b","children":[{"t":"num","text":"(b)"},{"t":"heading","text":"Qualified veterans\u2019 mortgage bond defined"},{"t":"chapeau","text":"For purposes of this part, the term \u201cqualified veterans\u2019 mortgage bond\u201d means any bond\u2014"},{"t":"para","id":"/us/usc/t26/s143/b/1","children":[{"t":"num","text":"(1)"},{"t":"content","text":" which is issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide residences for veterans,","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/b/2","children":[{"t":"num","text":"(2)"},{"t":"content","text":" the payment of the principal and interest on which is secured by the general obligation of a State,","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/b/3","children":[{"t":"num","text":"(3)"},{"t":"content","text":" which is part of an issue which meets the requirements of subsections (c), (g), (i)(1), and (","children":[{"t":"text","text":"l","tail":"), and"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/b/4","children":[{"t":"num","text":"(4)"},{"t":"content","text":" which is part of an issue which does not meet the private business tests of paragraphs (1) and (2) of section 141(b).","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(2) shall apply to the requirements specified in paragraph (3) of this subsection.","tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/c","children":[{"t":"num","text":"(c)"},{"t":"heading","text":"Residence requirements"},{"t":"para","id":"/us/usc/t26/s143/c/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"For a residence"},{"t":"chapeau","text":"A residence meets the requirements of this subsection only if\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/c/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" it is a single-family residence which can reasonably be expected to become the principal residence of the mortgagor within a reasonable time after the financing is provided, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/c/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" it is located within the jurisdiction of the authority issuing the bond.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/c/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"For an issue"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if all of the residences for which owner-financing is provided under the issue meet the requirements of paragraph (1).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/d","children":[{"t":"num","text":"(d)"},{"t":"heading","text":"3-year requirement"},{"t":"para","id":"/us/usc/t26/s143/d/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if 95 percent or more of the net proceeds of such issue are used to finance the residences of mortgagors who had no present ownership interest in their principal residences at any time during the 3-year period ending on the date their mortgage is executed.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/d/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Exceptions"},{"t":"chapeau","text":"For purposes of paragraph (1), the proceeds of an issue which are used to provide\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/d/2/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" financing with respect to targeted area residences,","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/d/2/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" qualified home improvement loans and qualified rehabilitation loans,","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/d/2/C","children":[{"t":"num","text":"(C)"},{"t":"content","text":" financing with respect to land described in subsection (i)(1)(C) and the construction of any residence thereon, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/d/2/D","children":[{"t":"num","text":"(D)"},{"t":"content","text":" in the case of bonds issued after the date of the enactment of this subparagraph, financing of any residence for a veteran (as defined in ","children":[{"t":"ref","text":"section 101 of title 38","href":"/us/usc/t38/s101","tail":", United States Code), if such veteran has not previously qualified for and received such financing by reason of this subparagraph,"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"shall be treated as used as described in paragraph (1).","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/d/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Mortgagor\u2019s interest in residence being financed"},{"t":"content","children":[{"t":"p","text":"For purposes of paragraph (1), a mortgagor\u2019s interest in the residence with respect to which the financing is being provided shall not be taken into account.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/e","children":[{"t":"num","text":"(e)"},{"t":"heading","text":"Purchase price requirement"},{"t":"para","id":"/us/usc/t26/s143/e/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if the acquisition cost of each residence the owner-financing of which is provided under the issue does not exceed 90 percent of the average area purchase price applicable to such residence.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/e/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Average area purchase price"},{"t":"content","children":[{"t":"p","text":"For purposes of paragraph (1), the term \u201caverage area purchase price\u201d means, with respect to any residence, the average purchase price of single family residences (in the statistical area in which the residence is located) which were purchased during the most recent 12-month period for which sufficient statistical information is available. The determination under the preceding sentence shall be made as of the date on which the commitment to provide the financing is made (or, if earlier, the date of the purchase of the residence).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/e/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Separate application to new residences and old residences"},{"t":"chapeau","text":"For purposes of this subsection, the determination of average area purchase price shall be made separately with respect to\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/e/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" residences which have not been previously occupied, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/e/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" residences which have been previously occupied.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/e/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Special rule for 2 to 4 family residences"},{"t":"content","children":[{"t":"p","text":"For purposes of this subsection, to the extent provided in regulations, the determination of average area purchase price shall be made separately with respect to 1 family, 2 family, 3 family, and 4 family residences.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/e/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Special rule for targeted area residences"},{"t":"content","children":[{"t":"p","text":"In the case of a targeted area residence, paragraph (1) shall be applied by substituting \u201c110 percent\u201d for \u201c90 percent\u201d.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/e/6","children":[{"t":"num","text":"(6)"},{"t":"heading","text":"Exception for qualified home improvement loans"},{"t":"content","children":[{"t":"p","text":"Paragraph (1) shall not apply with respect to any qualified home improvement loan.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/f","children":[{"t":"num","text":"(f)"},{"t":"heading","text":"Income requirements"},{"t":"para","id":"/us/usc/t26/s143/f/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if all owner-financing provided under the issue is provided for mortgagors whose family income is 115 percent or less of the applicable median family income.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/f/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Determination of family income"},{"t":"content","children":[{"t":"p","text":"For purposes of this subsection, the family income of mortgagors, and area median gross income, shall be determined by the Secretary after taking into account the regulations prescribed under section 8 of the United States Housing Act of 1937 (or, if such program is terminated, under such program as in effect immediately before such termination).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/f/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Special rule for applying paragraph (1) in the case of targeted area residences"},{"t":"chapeau","text":"In the case of any financing provided under any issue for targeted area residences\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/f/3/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" \u2153 of the amount of such financing may be provided without regard to paragraph (1), and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/3/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" paragraph (1) shall be treated as satisfied with respect to the remainder of the owner financing if the family income of the mortgagor is 140 percent or less of the applicable median family income.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/f/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Applicable median family income"},{"t":"chapeau","text":"For purposes of this subsection, the term \u201capplicable median family income\u201d means, with respect to a residence, whichever of the following is the greater:"},{"t":"subpara","id":"/us/usc/t26/s143/f/4/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the area median gross income for the area in which such residence is located, or","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/4/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" the statewide median gross income for the State in which such residence is located.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/f/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Adjustment of income requirement based on relation of high housing costs to income"},{"t":"subpara","id":"/us/usc/t26/s143/f/5/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"If the residence (for which financing is provided under the issue) is located in a high housing cost area and the limitation determined under this paragraph is greater than the limitation otherwise applicable under paragraph (1), there shall be substituted for the income limitation in paragraph (1), a limitation equal to the percentage determined under subparagraph (B) of the area median gross income for such area.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/5/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Income requirements for residences in high housing cost area"},{"t":"chapeau","text":"The percentage determined under this subparagraph for a residence located in a high housing cost area is the percentage (not greater than 140 percent) equal to the product of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/B/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" 115 percent, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/B/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the amount by which the housing cost/income ratio for such area exceeds 0.2.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/5/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"High housing cost areas"},{"t":"content","children":[{"t":"p","text":"For purposes of this paragraph, the term \u201chigh housing cost area\u201d means any statistical area for which the housing cost/income ratio is greater than 1.2.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/5/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Housing cost/income ratio"},{"t":"chapeau","text":"For purposes of this paragraph\u2014"},{"t":"clause","id":"/us/usc/t26/s143/f/5/D/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201chousing cost/income ratio\u201d means, with respect to any statistical area, the number determined by dividing\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/D/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the applicable housing price ratio for such area, by","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/D/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the ratio which the area median gross income for such area bears to the median gross income for the United States.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/f/5/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Applicable housing price ratio"},{"t":"content","children":[{"t":"p","text":"For purposes of clause (i), the applicable housing price ratio for any area is the new housing price ratio or the existing housing price ratio, whichever results in the housing cost/income ratio being closer to 1.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/f/5/D/iii","children":[{"t":"num","text":"(iii)"},{"t":"heading","text":"New housing price ratio"},{"t":"chapeau","text":"The new housing price ratio for any area is the ratio which\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/D/iii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the average area purchase price (as defined in subsection (e)(2)) for residences described in subsection (e)(3)(A) which are located in such area bears to","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/f/5/D/iii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the average purchase price (determined in accordance with the principles of subsection (e)(2)) for residences so described which are located in the United States.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/f/5/D/iv","children":[{"t":"num","text":"(iv)"},{"t":"heading","text":"Existing housing price ratio"},{"t":"content","children":[{"t":"p","text":"The existing housing price ratio for any area is the ratio determined in accordance with clause (iii) but with respect to residences described in subsection (e)(3)(B).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/f/6","children":[{"t":"num","text":"(6)"},{"t":"heading","text":"Adjustment to income requirements based on family size"},{"t":"chapeau","text":"In the case of a mortgagor having a family of fewer than 3 individuals, the preceding provisions of this subsection shall be applied by substituting\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/f/6/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" \u201c100 percent\u201d for \u201c115 percent\u201d each place it appears, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/f/6/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" \u201c120 percent\u201d for \u201c140 percent\u201d each place it appears.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/g","children":[{"t":"num","text":"(g)"},{"t":"heading","text":"Requirements related to arbitrage"},{"t":"para","id":"/us/usc/t26/s143/g/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if such issue meets the requirements of paragraph (2) of this subsection and, in the case of an issue described in subsection (b)(1), such issue also meets the requirements of paragraph (3) of this subsection. Such requirements shall be in addition to the requirements of section 148.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/g/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Effective rate of mortgage interest cannot exceed bond yield by more than 1.125 percentage points"},{"t":"subpara","id":"/us/usc/t26/s143/g/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"An issue shall be treated as meeting the requirements of this paragraph only if the excess of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/g/2/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the effective rate of interest on the mortgages provided under the issue, over","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/2/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the yield on the issue,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"is not greater than 1.125 percentage points.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Effective rate of mortgage interest"},{"t":"clause","id":"/us/usc/t26/s143/g/2/B/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"In determining the effective rate of interest on any mortgage for purposes of this paragraph, there shall be taken into account all fees, charges, and other amounts borne by the mortgagor which are attributable to the mortgage or to the bond issue.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/2/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Specification of some of the amounts to be treated as borne by the mortgagor"},{"t":"chapeau","text":"For purposes of clause (i), the following items (among others) shall be treated as borne by the mortgagor:"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/ii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" all points or similar charges paid by the seller of the property, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/ii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the excess of the amounts received from any person other than the mortgagor by any person in connection with the acquisition of the mortgagor\u2019s interest in the property over the usual and reasonable acquisition costs of a person acquiring like property where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans\u2019 mortgage bonds.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/2/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"heading","text":"Specification of some of the amounts to be treated as not borne by the mortgagor"},{"t":"chapeau","text":"For purposes of clause (i), the following items shall not be taken into account:"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/iii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" any expected rebate of arbitrage profits, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/iii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" any application fee, survey fee, credit report fee, insurance charge, or similar amount to the extent such amount does not exceed amounts charged in such area in cases where owner-financing is not provided through the use of qualified mortgage bonds or qualified veterans\u2019 mortgage bonds.","tail":"\n"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"\u2001Subclause (II) shall not apply to origination fees, points, or similar amounts.","tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/2/B/iv","children":[{"t":"num","text":"(iv)"},{"t":"heading","text":"Prepayment assumptions"},{"t":"chapeau","text":"In determining the effective rate of interest\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/iv/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" it shall be assumed that the mortgage prepayment rate will be the rate set forth in the most recent applicable mortgage maturity experience table published by the Federal Housing Administration, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/g/2/B/iv/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" prepayments of principal shall be treated as received on the last day of the month in which the issuer reasonably expects to receive such prepayments.","tail":"\n"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"\u2001The Secretary may by regulation adjust the mortgage prepayment rate otherwise used in determining the effective rate of interest to the extent the Secretary determines that such an adjustment is appropriate by reason of the impact of subsection (m).","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/2/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Yield on the issue"},{"t":"chapeau","text":"For purposes of this subsection, the yield on an issue shall be determined on the basis of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/g/2/C/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the issue price (within the meaning of sections 1273 and 1274), and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/2/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" an expected maturity for the bonds which is consistent with the assumptions required under subparagraph (B)(iv).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/g/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Arbitrage and investment gains to be used to reduce costs of owner-financing"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"An issue shall be treated as meeting the requirements of this paragraph only if an amount equal to the sum of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/g/3/A/i","children":[{"t":"num","text":"(i)"},{"t":"chapeau","text":" the excess of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/g/3/A/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the amount earned on all nonpurpose investments (other than investments attributable to an excess described in this clause), over","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/g/3/A/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the amount which would have been earned if such investments were invested at a rate equal to the yield on the issue, plus","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/3/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" any income attributable to the excess described in clause (i),","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"is paid or credited to the mortgagors as rapidly as may be practicable.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Investment gains and losses"},{"t":"content","children":[{"t":"p","text":"For purposes of subparagraph (A), in determining the amount earned on all nonpurpose investments, any gain or loss on the disposition of such investments shall be taken into account.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Reduction where issuer does not use full 1.125 percentage points under paragraph (2)"},{"t":"clause","id":"/us/usc/t26/s143/g/3/C/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"The amount required to be paid or credited to mortgagors under subparagraph (A) (determined under this paragraph without regard to this subparagraph) shall be reduced by the unused paragraph (2) amount.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/3/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Unused paragraph (2) amount"},{"t":"content","children":[{"t":"p","text":"For purposes of clause (i), the unused paragraph (2) amount is the amount which (if it were treated as an interest payment made by mortgagors) would result in the excess referred to in paragraph (2)(A) being equal to 1.125 percentage points. Such amount shall be fixed and determined as of the yield determination date.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Election to pay United States"},{"t":"chapeau","text":"Subparagraph (A) shall be satisfied with respect to any issue if the issuer elects before issuing the bonds to pay over to the United States\u2014"},{"t":"clause","id":"/us/usc/t26/s143/g/3/D/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" not less frequently than once each 5 years after the date of issue, an amount equal to 90 percent of the aggregate amount which would be required to be paid or credited to mortgagors under subparagraph (A) (and not theretofore paid to the United States), and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/g/3/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" not later than 60 days after the redemption of the last bond, 100 percent of such aggregate amount not theretofore paid to the United States.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/E","children":[{"t":"num","text":"(E)"},{"t":"heading","text":"Simplified accounting"},{"t":"content","children":[{"t":"p","text":"The Secretary shall permit any simplified system of accounting for purposes of this paragraph which the issuer establishes to the satisfaction of the Secretary will assure that the purposes of this paragraph are carried out.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/g/3/F","children":[{"t":"num","text":"(F)"},{"t":"heading","text":"Nonpurpose investment"},{"t":"content","children":[{"t":"p","text":"For purposes of this paragraph, the term \u201cnonpurpose investment\u201d has the meaning given such term by section 148(f)(6)(A).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/h","children":[{"t":"num","text":"(h)"},{"t":"heading","text":"Portion of loans required to be placed in targeted areas"},{"t":"para","id":"/us/usc/t26/s143/h/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if at least 20 percent of the proceeds of the issue which are devoted to providing owner-financing is made available (with reasonable diligence) for owner-financing of targeted area residences for at least 1 year after the date on which owner-financing is first made available with respect to targeted area residences.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/h/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Limitation"},{"t":"content","children":[{"t":"p","text":"Nothing in paragraph (1) shall be treated as requiring the making available of an amount which exceeds 40 percent of the average annual aggregate principal amount of mortgages executed during the immediately preceding 3 calendar years for single-family, owner-occupied residences located in targeted areas within the jurisdiction of the issuing authority.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"Other requirements"},{"t":"para","id":"/us/usc/t26/s143/i/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Mortgages must be new mortgages"},{"t":"subpara","id":"/us/usc/t26/s143/i/1/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if no part of the proceeds of such issue is used to acquire or replace existing mortgages.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/i/1/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Exceptions"},{"t":"chapeau","text":"Under regulations prescribed by the Secretary, the replacement of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/i/1/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" construction period loans,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/i/1/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" bridge loans or similar temporary initial financing, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/i/1/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" in the case of a qualified rehabilitation, an existing mortgage,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"shall not be treated as the acquisition or replacement of an existing mortgage for purposes of subparagraph (A).","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/i/1/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Exception for certain contract for deed agreements"},{"t":"clause","id":"/us/usc/t26/s143/i/1/C/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"In the case of land possessed under a contract for deed by a mortgagor\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/i/1/C/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" whose principal residence (within the meaning of section 121) is located on such land, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/i/1/C/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" whose family income (as defined in subsection (f)(2)) is not more than 50 percent of applicable median family income (as defined in subsection (f)(4)),","tail":"\n"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"\u2001the contract for deed shall not be treated as an existing mortgage for purposes of subparagraph (A).","tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/i/1/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Contract for deed defined"},{"t":"chapeau","text":"For purposes of this subparagraph, the term \u201ccontract for deed\u201d means a seller-financed contract for the conveyance of land under which\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/i/1/C/ii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" legal title does not pass to the purchaser until the consideration under the contract is fully paid to the seller, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/i/1/C/ii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the seller\u2019s remedy for nonpayment is forfeiture rather than judicial or nonjudicial foreclosure.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/i/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Certain requirements must be met where mortgage is assumed"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this subsection only if each mortgage with respect to which owner-financing has been provided under such issue may be assumed only if the requirements of subsections (c), (d), and (e), and the requirements of paragraph (1) or (3)(B) of subsection (f) (whichever applies), are met with respect to such assumption.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/j","children":[{"t":"num","text":"(j)"},{"t":"heading","text":"Targeted area residences"},{"t":"para","id":"/us/usc/t26/s143/j/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"For purposes of this section, the term \u201ctargeted area residence\u201d means a residence in an area which is either\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/j/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" a qualified census tract, or","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/j/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" an area of chronic economic distress.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/j/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Qualified census tract"},{"t":"subpara","id":"/us/usc/t26/s143/j/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"For purposes of paragraph (1), the term \u201cqualified census tract\u201d means a census tract in which 70 percent or more of the families have income which is 80 percent or less of the statewide median family income.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/j/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Data used"},{"t":"content","children":[{"t":"p","text":"The determination under subparagraph (A) shall be made on the basis of the most recent decennial census for which data are available.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/j/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Area of chronic economic distress"},{"t":"subpara","id":"/us/usc/t26/s143/j/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"For purposes of paragraph (1), the term \u201carea of chronic economic distress\u201d means an area of chronic economic distress\u2014"},{"t":"clause","id":"/us/usc/t26/s143/j/3/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" designated by the State as meeting the standards established by the State for purposes of this subsection, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/j/3/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the designation of which has been approved by the Secretary and the Secretary of Housing and Urban Development.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/j/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Criteria to be used in approving State designations"},{"t":"chapeau","text":"The criteria used by the Secretary and the Secretary of Housing and Urban Development in evaluating any proposed designation of an area for purposes of this subsection shall be\u2014"},{"t":"clause","id":"/us/usc/t26/s143/j/3/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the condition of the housing stock, including the age of the housing and the number of abandoned and substandard residential units,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/j/3/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the need of area residents for owner-financing under this section, as indicated by low per capita income, a high percentage of families in poverty, a high number of welfare recipients, and high unemployment rates,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/j/3/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" the potential for use of owner-financing under this section to improve housing conditions in the area, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/j/3/B/iv","children":[{"t":"num","text":"(iv)"},{"t":"content","text":" the existence of a housing assistance plan which provides a displacement program and a public improvements and services program.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/k","children":[{"t":"num","text":"(k)"},{"t":"heading","text":"Other definitions and special rules"},{"t":"chapeau","text":"For purposes of this section\u2014"},{"t":"para","id":"/us/usc/t26/s143/k/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Mortgage"},{"t":"content","children":[{"t":"p","text":"The term \u201cmortgage\u201d means any owner-financing.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Statistical area"},{"t":"subpara","id":"/us/usc/t26/s143/k/2/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201cstatistical area\u201d means\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/2/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" a metropolitan statistical area, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/2/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" any county (or the portion thereof) which is not within a metropolitan statistical area.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/2/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Metropolitan statistical area"},{"t":"content","children":[{"t":"p","text":"The term \u201cmetropolitan statistical area\u201d includes the area defined as such by the Secretary of Commerce.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/2/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Designation where adequate statistical information not available"},{"t":"content","children":[{"t":"p","text":"For purposes of this paragraph, if there is insufficient recent statistical information with respect to a county (or portion thereof) described in subparagraph (A)(ii), the Secretary may substitute for such county (or portion thereof) another area for which there is sufficient recent statistical information.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/2/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Designation where no county"},{"t":"content","children":[{"t":"p","text":"In the case of any portion of a State which is not within a county, subparagraphs (A)(ii) and (C) shall be applied by substituting for \u201ccounty\u201d an area designated by the Secretary which is the equivalent of a county.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Acquisition cost"},{"t":"subpara","id":"/us/usc/t26/s143/k/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"The term \u201cacquisition cost\u201d means the cost of acquiring the residence as a completed residential unit.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Exceptions"},{"t":"chapeau","text":"The term \u201cacquisition cost\u201d does not include\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/3/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" usual and reasonable settlement or financing costs,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/3/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the value of services performed by the mortgagor or members of his family in completing the residence, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/3/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" the cost of land (other than land described in subsection (i)(1)(C)(i)) which has been owned by the mortgagor for at least 2 years before the date on which construction of the residence begins.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/3/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Special rule for qualified rehabilitation loans"},{"t":"content","children":[{"t":"p","text":"In the case of a qualified rehabilitation loan, for purposes of subsection (e), the term \u201cacquisition cost\u201d includes the cost of the rehabilitation.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Qualified home improvement loan"},{"t":"chapeau","text":"The term \u201cqualified home improvement loan\u201d means the financing (in an amount which does not exceed $15,000)\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/k/4/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" of alterations, repairs, and improvements on or in connection with an existing residence by the owner thereof, but","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/4/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" only of such items as substantially protect or improve the basic livability or energy efficiency of the property.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Qualified rehabilitation loan"},{"t":"subpara","id":"/us/usc/t26/s143/k/5/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201cqualified rehabilitation loan\u201d means any owner-financing provided in connection with\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/5/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" a qualified rehabilitation, or","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/5/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the acquisition of a residence with respect to which there has been a qualified rehabilitation,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"but only if the mortgagor to whom such financing is provided is the first resident of the residence after the completion of the rehabilitation.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/5/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Qualified rehabilitation"},{"t":"chapeau","text":"For purposes of subparagraph (A), the term \u201cqualified rehabilitation\u201d means any rehabilitation of a building if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/5/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" there is a period of at least 20 years between the date on which the building was first used and the date on which the physical work on such rehabilitation begins,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/5/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"chapeau","text":" in the rehabilitation process\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/k/5/B/ii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" 50 percent or more of the existing external walls of such building are retained in place as external walls,","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/k/5/B/ii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/k/5/B/ii/III","children":[{"t":"num","text":"(III)"},{"t":"content","text":" 75 percent or more of the existing internal structural framework of such building is retained in place, and","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/5/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" the expenditures for such rehabilitation are 25 percent or more of the mortgagor\u2019s adjusted basis in the residence.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"For purposes of clause (iii), the mortgagor\u2019s adjusted basis shall be determined as of the completion of the rehabilitation or, if later, the date on which the mortgagor acquires the residence.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/6","children":[{"t":"num","text":"(6)"},{"t":"heading","text":"Determinations on actuarial basis"},{"t":"content","children":[{"t":"p","text":"All determinations of yield, effective interest rates, and amounts required to be paid or credited to mortgagors or paid to the United States under subsection (g) shall be made on an actuarial basis taking into account the present value of money.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/7","children":[{"t":"num","text":"(7)"},{"t":"heading","text":"Single-family and owner-occupied residences include certain residences with 2 to 4 units"},{"t":"chapeau","text":"Except for purposes of subsection (h)(2), the terms \u201csingle-family\u201d and \u201cowner-occupied\u201d, when used with respect to residences, include 2, 3, or 4 family residences\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/k/7/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" one unit of which is occupied by the owner of the units, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/7/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" which were first occupied at least 5 years before the mortgage is executed.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"Subparagraph (B) shall not apply to any 2-family residence if the residence is a targeted area residence and the family income of the mortgagor meets the requirement of subsection (f)(3)(B).","tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/8","children":[{"t":"num","text":"(8)"},{"t":"heading","text":"Cooperative housing corporations"},{"t":"subpara","id":"/us/usc/t26/s143/k/8/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"In the case of any cooperative housing corporation\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/8/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" each dwelling unit shall be treated as if it were actually owned by the person entitled to occupy such dwelling unit by reason of his ownership of stock in the corporation, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/8/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" any indebtedness of the corporation allocable to the dwelling unit shall be treated as if it were indebtedness of the shareholder entitled to occupy the dwelling unit.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/8/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Adjustment to targeted area requirement"},{"t":"content","children":[{"t":"p","text":"In the case of any issue to provide financing to a cooperative housing corporation with respect to cooperative housing not located in a targeted area, to the extent provided in regulations, such issue may be combined with 1 or more other issues for purposes of determining whether the requirements of subsection (h) are met.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/8/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Cooperative housing corporation"},{"t":"content","children":[{"t":"p","text":"The term \u201ccooperative housing corporation\u201d has the meaning given to such term by section 216(b)(1).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/9","children":[{"t":"num","text":"(9)"},{"t":"heading","text":"Treatment of limited equity cooperative housing"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Treatment as residential rental property"},{"t":"chapeau","text":"Except as provided in subparagraph (B), for purposes of this part\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/9/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" any limited equity cooperative housing shall be treated as residential rental property and not as owner-occupied housing, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/9/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" bonds issued to provide such housing shall be subject to the same requirements and limitations as bonds the proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Bonds subject to qualified mortgage bond termination date"},{"t":"content","children":[{"t":"p","text":"Subparagraph (A) shall not apply to any bond issued after the date specified in subsection (a)(1)(B).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Limited equity cooperative housing"},{"t":"content","children":[{"t":"p","text":"For purposes of this paragraph, the term \u201climited equity cooperative housing\u201d means any dwelling unit which a person is entitled to occupy by reason of his ownership of stock in a qualified cooperative housing corporation.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Qualified cooperative housing corporation"},{"t":"chapeau","text":"For purposes of this paragraph, the term \u201cqualified cooperative housing corporation\u201d means any cooperative housing corporation (as defined in section 216(b)(1)) if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/9/D/i","children":[{"t":"num","text":"(i)"},{"t":"chapeau","text":" the consideration paid for stock held by any stockholder entitled to occupy any house or apartment in a building owned or leased by the corporation may not exceed the sum of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/k/9/D/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the consideration paid for such stock by the first such stockholder, as adjusted by a cost-of-living adjustment determined by the Secretary,","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/k/9/D/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" payments made by any stockholder for improvements to such house or apartment, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/k/9/D/i/III","children":[{"t":"num","text":"(III)"},{"t":"content","text":" payments (other than amounts taken into account under subclause (I) or (II)) attributable to any stockholder to amortize the principal of the corporation\u2019s indebtedness arising from the acquisition or development of real property, including improvements thereof,","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/9/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the value of the corporation\u2019s assets (reduced by any corporate liabilities), to the extent such value exceeds the combined transfer values of the outstanding corporate stock, shall be used only for public benefit or charitable purposes, or directly to benefit the corporation itself, and shall not be used directly to benefit any stockholder, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/9/D/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" at the time of issuance of the issue, such corporation makes an election under this paragraph.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/E","children":[{"t":"num","text":"(E)"},{"t":"heading","text":"Effect of election"},{"t":"content","children":[{"t":"p","text":"If a cooperative housing corporation makes an election under this paragraph, section 216 shall not apply with respect to such corporation (or any successor thereof) during the qualified project period (as defined in section 142(d)(2)).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/F","children":[{"t":"num","text":"(F)"},{"t":"heading","text":"Corporation must continue to be qualified cooperative"},{"t":"content","children":[{"t":"p","text":"Subparagraph (A)(i) shall not apply to limited equity cooperative housing unless the cooperative housing corporation continues to be a qualified cooperative housing corporation at all times during the qualified project period (as defined in section 142(d)(2)).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/9/G","children":[{"t":"num","text":"(G)"},{"t":"heading","text":"Election irrevocable"},{"t":"content","children":[{"t":"p","text":"Any election under this paragraph, once made, shall be irrevocable.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/10","children":[{"t":"num","text":"(10)"},{"t":"heading","text":"Treatment of resale price control and subsidy lien programs"},{"t":"subpara","id":"/us/usc/t26/s143/k/10/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"In the case of a residence which is located in a high housing cost area (as defined in section 143(f)(5)), the interest of a governmental unit in such residence by reason of financing provided under any qualified program shall not be taken into account under this section (other than subsection (m)), and the acquisition cost of the residence which is taken into account under subsection (e) shall be such cost reduced by the amount of such financing.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/10/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Qualified program"},{"t":"chapeau","text":"For purposes of subparagraph (A), the term \u201cqualified program\u201d means any governmental program providing mortgage loans (other than 1st mortgage loans) or grants\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/10/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" which restricts (throughout the 9-year period beginning on the date the financing is provided) the resale of the residence to a purchaser qualifying under this section and to a price determined by an index that reflects less than the full amount of any appreciation in the residence\u2019s value, or","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/10/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" which provides for deferred or reduced interest payments on such financing and grants the governmental unit a share in the appreciation of the residence,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"but only if such financing is not provided directly or indirectly through the use of any tax-exempt private activity bond.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/11","children":[{"t":"num","text":"(11)"},{"t":"heading","text":"Special rules for residences located in disaster areas"},{"t":"chapeau","text":"In the case of a residence located in an area determined by the President to warrant assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (as in effect on the date of the enactment of the Taxpayer Relief Act of 1997), this section shall be applied with the following modifications to financing provided with respect to such residence within 2 years after the date of the disaster declaration:"},{"t":"subpara","id":"/us/usc/t26/s143/k/11/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" Subsection (d) (relating to 3-year requirement) shall not apply.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/11/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" Subsections (e) and (f) (relating to purchase price requirement and income requirement) shall be applied as if such residence were a targeted area residence.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"The preceding sentence shall apply only with respect to bonds issued after ","children":[{"t":"text","text":"May 1, 2008","tail":", and before "},{"t":"text","text":"January 1, 2010","tail":"."}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/12","children":[{"t":"num","text":"(12)"},{"t":"heading","text":"Special rules for subprime refinancings"},{"t":"subpara","id":"/us/usc/t26/s143/k/12/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"Notwithstanding the requirements of subsection (i)(1), the proceeds of a qualified mortgage issue may be used to refinance a mortgage on a residence which was originally financed by the mortgagor through a qualified subprime loan.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/12/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Special rules"},{"t":"chapeau","text":"In applying subparagraph (A) to any refinancing\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/12/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" subsection (a)(2)(D)(i) shall be applied by substituting \u201c12-month period\u201d for \u201c42-month period\u201d each place it appears,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/12/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" subsection (d) (relating to 3-year requirement) shall not apply, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/12/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" 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.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/12/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Qualified subprime loan"},{"t":"content","children":[{"t":"p","text":"The term \u201cqualified subprime loan\u201d means an adjustable rate single-family residential mortgage loan made after ","children":[{"t":"text","text":"December 31, 2001","tail":", and before "},{"t":"text","text":"January 1, 2008","tail":", that the bond issuer determines would be reasonably likely to cause financial hardship to the borrower if not refinanced."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/12/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Termination"},{"t":"content","children":[{"t":"p","text":"This paragraph shall not apply to any bonds issued after ","children":[{"t":"text","text":"December 31, 2010","tail":"."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/k/13","children":[{"t":"num","text":"(13)"},{"t":"heading","text":"Special rules for residences destroyed in federally declared disasters"},{"t":"subpara","id":"/us/usc/t26/s143/k/13/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Principal residence destroyed"},{"t":"chapeau","text":"At the election of the taxpayer, if the principal residence (within the meaning of section 121) of such taxpayer is\u2014"},{"t":"clause","id":"/us/usc/t26/s143/k/13/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" rendered unsafe for use as a residence by reason of a federally declared disaster occurring before ","children":[{"t":"text","text":"January 1, 2010","tail":", or"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/13/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" demolished or relocated by reason of an order of the government of a State or political subdivision thereof on account of a federally declared disaster occurring before such date,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"then, for the 2-year period beginning on the date of the disaster declaration, subsection (d)(1) shall not apply with respect to such taxpayer and subsection (e) shall be applied by substituting \u201c110\u201d for \u201c90\u201d in paragraph (1) thereof.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/13/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Principal residence damaged"},{"t":"clause","id":"/us/usc/t26/s143/k/13/B/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"At the election of the taxpayer, if the principal residence (within the meaning of section 121) of such taxpayer was damaged as the result of a federally declared disaster occurring before ","children":[{"t":"text","text":"January 1, 2010","tail":", any owner-financing provided in connection with the repair or reconstruction of such residence shall be treated as a qualified rehabilitation loan."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/13/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Limitation"},{"t":"chapeau","text":"The aggregate owner-financing to which clause (i) applies shall not exceed the lesser of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/k/13/B/ii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the cost of such repair or reconstruction, or","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/k/13/B/ii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" $150,000.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/13/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Federally declared disaster"},{"t":"content","children":[{"t":"p","text":"For purposes of this paragraph, the term \u201cfederally declared disaster\u201d has the meaning given such term by section 165(h)(3)(C)(i).","children":[{"t":"ref","text":"1"},{"t":"num","text":"1","tail":"\u202fSee References in Text note below."},{"t":"text","text":"\u202fSee References in Text note below."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/k/13/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Election; denial of double benefit"},{"t":"clause","id":"/us/usc/t26/s143/k/13/D/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"Election"},{"t":"content","children":[{"t":"p","text":"An election under this paragraph may not be revoked except with the consent of the Secretary.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/k/13/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Denial of double benefit"},{"t":"content","children":[{"t":"p","text":"If a taxpayer elects the application of this paragraph, paragraph (11) shall not apply with respect to the purchase or financing of any residence by such taxpayer.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/l","children":[{"t":"num","text":"(l)"},{"t":"heading","text":"Additional requirements for qualified veterans\u2019 mortgage bonds"},{"t":"chapeau","text":"An issue meets the requirements of this subsection only if it meets the requirements of paragraphs (1), (2), and (3)."},{"t":"para","id":"/us/usc/t26/s143/l/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"Veterans to whom financing may be provided"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this paragraph only if each mortgagor to whom financing is provided under the issue is a qualified veteran.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/l/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Requirement that State program be in effect before June 22, 1984"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this paragraph only if it is a general obligation of a State which issued qualified veterans\u2019 mortgage bonds before ","children":[{"t":"text","text":"June 22, 1984","tail":"."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/l/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Volume limitation"},{"t":"subpara","id":"/us/usc/t26/s143/l/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"An issue meets the requirements of this paragraph only if the aggregate amount of bonds issued pursuant thereto (when added to the aggregate amount of qualified veterans\u2019 mortgage bonds previously issued by the State during the calendar year) does not exceed the State veterans limit for such calendar year.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/l/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"State veterans limit"},{"t":"clause","id":"/us/usc/t26/s143/l/3/B/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"In the case of any State to which clause (ii) does not apply, the State veterans limit for any calendar year is the amount equal to\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/B/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the aggregate amount of qualified veterans bonds issued by such State during the period beginning on ","children":[{"t":"text","text":"January 1, 1979","tail":", and ending on "},{"t":"text","text":"June 22, 1984","tail":" (not including the amount of any qualified veterans bond issued by such State during the calendar year (or portion thereof) in such period for which the amount of such bonds so issued was the lowest), divided by"}],"tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/B/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the number (not to exceed 5) of calendar years after 1979 and before 1985 during which the State issued qualified veterans bonds (determined by only taking into account bonds issued on or before ","children":[{"t":"text","text":"June 22, 1984","tail":")."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/l/3/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Alaska, Oregon, and Wisconsin"},{"t":"chapeau","text":"In the case of the following States, the State veterans limit for any calendar year is the amount equal to\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/B/ii/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" $100,000,000 for the State of Alaska,","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/B/ii/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" $100,000,000 for the State of Oregon, and","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/B/ii/III","children":[{"t":"num","text":"(III)"},{"t":"content","text":" $100,000,000 for the State of Wisconsin.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/l/3/B/iii","children":[{"t":"num","text":"(iii)"},{"t":"heading","text":"Phasein"},{"t":"content","children":[{"t":"p","text":"In the case of calendar years beginning before 2010, clause (ii) shall be applied by substituting for each of the dollar amounts therein an amount equal to the applicable percentage of such dollar amount. For purposes of the preceding sentence, the applicable percentage shall be determined in accordance with the following table:","children":[{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"For Calendar Year:"}]},{"t":"p","children":[{"t":"text","text":"Applicable percentage is:"}]},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"2006"}]},{"t":"p","text":"20 percent\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"2007"}]},{"t":"p","text":"40 percent\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"2008"}]},{"t":"p","text":"60 percent\u202f\u202f"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"2009"}]},{"t":"p","text":"\u202f80 percent."},{"t":"text","text":"\n"},{"t":"text","text":"\n","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/l/3/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Treatment of refunding issues"},{"t":"clause","id":"/us/usc/t26/s143/l/3/C/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"For purposes of subparagraph (A), the term \u201cqualified veterans\u2019 mortgage bond\u201d shall not include any bond issued to refund another bond but only if the maturity date of the refunding bond is not later than the later of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/C/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the maturity date of the bond to be refunded, or","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/l/3/C/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the date 32 years after the date on which the refunded bond was issued (or in the case of a series of refundings, the date on which the original bond was issued).","tail":"\n"}],"tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"\u2001The preceding sentence shall apply only to the extent that the amount of the refunding bond does not exceed the outstanding amount of the refunded bond.","tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/l/3/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Exception for advance refunding"},{"t":"content","children":[{"t":"p","text":"Clause (i) shall not apply to any bond issued to advance refund another bond.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/l/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Qualified veteran"},{"t":"chapeau","text":"For purposes of this subsection, the term \u201cqualified veteran\u201d means any veteran who\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/l/4/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" served on active duty, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/l/4/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" applied for the financing before the date 25 years after the last date on which such veteran left active service.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/l/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Special rule for certain short-term bonds"},{"t":"chapeau","text":"In the case of any bond\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/l/5/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" which has a term of 1 year or less,","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/l/5/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" which is authorized to be issued under O.R.S. 407.435 (as in effect on the date of the enactment of this subsection), to provide financing for property taxes, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/l/5/C","children":[{"t":"num","text":"(C)"},{"t":"content","text":" which is redeemed at the end of such term,","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"the amount taken into account under this subsection with respect to such bond shall be ","children":[{"t":"text","text":"1","tail":"\u2044"},{"t":"text","text":"15","tail":" of its principal amount."}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subsec","id":"/us/usc/t26/s143/m","children":[{"t":"num","text":"(m)"},{"t":"heading","text":"Recapture of portion of Federal subsidy from use of qualified mortgage bonds and mortgage credit certificates"},{"t":"para","id":"/us/usc/t26/s143/m/1","children":[{"t":"num","text":"(1)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"If, during the taxable year, any taxpayer disposes of an interest in a residence with respect to which there is or was any federally-subsidized indebtedness for the payment of which the taxpayer was liable in whole or part, then the taxpayer\u2019s tax imposed by this chapter for such taxable year shall be increased by the lesser of\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/m/1/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" the recapture amount with respect to such indebtedness, or","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/1/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" 50 percent of the gain (if any) on the disposition of such interest.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/2","children":[{"t":"num","text":"(2)"},{"t":"heading","text":"Exceptions"},{"t":"chapeau","text":"Paragraph (1) shall not apply to\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/m/2/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" any disposition by reason of death, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/2/B","children":[{"t":"num","text":"(B)"},{"t":"content","text":" any disposition which is more than 9 years after the testing date.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/3","children":[{"t":"num","text":"(3)"},{"t":"heading","text":"Federally-subsidized indebtedness"},{"t":"chapeau","text":"For purposes of this subsection\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/m/3/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The term \u201cfederally-subsidized indebtedness\u201d means any indebtedness if\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/3/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" financing for the indebtedness was provided in whole or part from the proceeds of any tax-exempt qualified mortgage bond, or","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/3/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" any credit was allowed under section 25 (relating to interest on certain home mortgages) to the taxpayer for interest paid or incurred on such indebtedness.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/3/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Exception for home improvement loans"},{"t":"content","children":[{"t":"p","text":"Such term shall not include any indebtedness to the extent such indebtedness is federally-subsidized indebtedness solely by reason of being a qualified home improvement loan (as defined in subsection (k)(4)).","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/4","children":[{"t":"num","text":"(4)"},{"t":"heading","text":"Recapture amount"},{"t":"chapeau","text":"For purposes of this subsection\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/m/4/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"chapeau","text":"The recapture amount with respect to any indebtedness is the amount equal to the product of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/4/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the federally-subsidized amount with respect to the indebtedness,","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/4/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the holding period percentage, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/4/A/iii","children":[{"t":"num","text":"(iii)"},{"t":"content","text":" the income percentage.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/4/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Federally-subsidized amount"},{"t":"content","children":[{"t":"p","text":"The federally-subsidized amount with respect to any indebtedness is the amount equal to 6.25 percent of the highest principal amount of the indebtedness for which the taxpayer was liable.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/4/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Holding period percentage"},{"t":"clause","id":"/us/usc/t26/s143/m/4/C/i","children":[{"t":"num","text":"(i)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"The term \u201cholding period percentage\u201d means the percentage determined in accordance with the following table:","children":[{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"If the disposition occurs during a year after the testing date which is:"}]},{"t":"p","children":[{"t":"text","text":"The holding period percentage is:"}]},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 1st such year"}]},{"t":"p","text":"20"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 2d such year"}]},{"t":"p","text":"40"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 3d such year"}]},{"t":"p","text":"60"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 4th such year"}]},{"t":"p","text":"80"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 5th such year"}]},{"t":"p","text":"100"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 6th such year"}]},{"t":"p","text":"80"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 7th such year"}]},{"t":"p","text":"60"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 8th such year"}]},{"t":"p","text":"40"},{"t":"text","text":"\n"},{"t":"p","text":"\u2001"},{"t":"p","children":[{"t":"text","text":"The 9th such year"}]},{"t":"p","text":"20."},{"t":"text","text":"\n"},{"t":"text","text":"\n","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/4/C/ii","children":[{"t":"num","text":"(ii)"},{"t":"heading","text":"Retirements of indebtedness"},{"t":"content","children":[{"t":"p","text":"If the federally-subsidized indebtedness is completely repaid during any year of the 4-year period beginning on the testing date, the holding period percentage for succeeding years shall be determined by reducing ratably to zero over the succeeding 5 years the holding period percentage which would have been determined under this subparagraph had the taxpayer disposed of his interest in the residence on the date of the repayment.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/4/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Testing date"},{"t":"chapeau","text":"The term \u201ctesting date\u201d means the earliest date on which all of the following requirements are met:"},{"t":"clause","id":"/us/usc/t26/s143/m/4/D/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" The indebtedness is federally-subsidized indebtedness.","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/4/D/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" The taxpayer is liable in whole or part for payment of the indebtedness.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/4/E","children":[{"t":"num","text":"(E)"},{"t":"heading","text":"Income percentage"},{"t":"chapeau","text":"The term \u201cincome percentage\u201d means the percentage (but not greater than 100 percent) which\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/4/E/i","children":[{"t":"num","text":"(i)"},{"t":"chapeau","text":" the excess of\u2014"},{"t":"subclause","id":"/us/usc/t26/s143/m/4/E/i/I","children":[{"t":"num","text":"(I)"},{"t":"content","text":" the modified adjusted gross income of the taxpayer for the taxable year in which the disposition occurs, over","tail":"\n"}],"tail":"\n"},{"t":"subclause","id":"/us/usc/t26/s143/m/4/E/i/II","children":[{"t":"num","text":"(II)"},{"t":"content","text":" the adjusted qualifying income for such taxable year, bears to","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/4/E/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" $5,000.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"The percentage determined under the preceding sentence shall be rounded to the nearest whole percentage point (or, if it includes a half of a percentage point, shall be increased to the nearest whole percentage point).","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/5","children":[{"t":"num","text":"(5)"},{"t":"heading","text":"Adjusted qualifying income; modified adjusted gross income"},{"t":"subpara","id":"/us/usc/t26/s143/m/5/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"Adjusted qualifying income"},{"t":"chapeau","text":"For purposes of paragraph (4), the term \u201cadjusted qualifying income\u201d means the product of\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/5/A/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the highest family income which (as of the date the financing was provided) would have met the requirements of subsection (f) with respect to the residents, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/5/A/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" 1.05 to the nth power where \u201cn\u201d equals the number of full years during the period beginning on the date the financing was provided and ending on the date of the disposition.","tail":"\n"}],"tail":"\n\n"},{"t":"continuation","text":"For purposes of clause (i), highest family income shall be determined without regard to subsection (f)(3)(A) and on the basis of the number of members of the taxpayer\u2019s family as of the date of the disposition.","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/5/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Modified adjusted gross income"},{"t":"chapeau","text":"For purposes of paragraph (4), the term \u201cmodified adjusted gross income\u201d means adjusted gross income\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/5/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" increased by the amount of interest received or accrued by the taxpayer during the taxable year which is excluded from gross income under section 103, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/5/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" decreased by the amount of gain (if any) included in gross income of the taxpayer by reason of the disposition to which this subsection applies.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/6","children":[{"t":"num","text":"(6)"},{"t":"heading","text":"Special rules relating to limitation on recapture amount based on gain realized"},{"t":"subpara","id":"/us/usc/t26/s143/m/6/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"In general"},{"t":"content","children":[{"t":"p","text":"For purposes of paragraph (1), gain shall be taken into account whether or not recognized, and the adjusted basis of the taxpayer\u2019s interest in the residence shall be determined without regard to sections 1033(b) and 1034(e) (as in effect on the day before the date of the enactment of the Taxpayer Relief Act of 1997) for purposes of determining gain.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/6/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Dispositions other than sales, exchanges, and involuntary conversions"},{"t":"content","children":[{"t":"p","text":"In the case of a disposition other than a sale, exchange, or involuntary conversion, gain shall be determined as if the interest had been sold for its fair market value.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/6/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Involuntary conversions resulting from casualties"},{"t":"content","children":[{"t":"p","text":"In the case of property which (as a result of its destruction in whole or in part by fire, storm, or other casualty) is compulsorily or involuntarily converted, paragraph (1) shall not apply to such conversion if the taxpayer purchases (during the period specified in section 1033(a)(2)(B)) property for use as his principal residence on the site of the converted property. For purposes of subparagraph (A), the adjusted basis of the taxpayer in the residence shall not be adjusted for any gain or loss on a conversion to which this subparagraph applies.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/7","children":[{"t":"num","text":"(7)"},{"t":"heading","text":"Issuer to inform mortgagor of federally-subsidized amount and family income limits"},{"t":"chapeau","text":"The issuer of the issue which provided the federally-subsidized indebtedness to the mortgagor shall\u2014"},{"t":"subpara","id":"/us/usc/t26/s143/m/7/A","children":[{"t":"num","text":"(A)"},{"t":"content","text":" at the time of settlement, provide a written statement informing the mortgagor of the potential recapture under this subsection, and","tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/7/B","children":[{"t":"num","text":"(B)"},{"t":"chapeau","text":" not later than 90 days after the date such indebtedness is provided, provide a written statement to the mortgagor specifying\u2014"},{"t":"clause","id":"/us/usc/t26/s143/m/7/B/i","children":[{"t":"num","text":"(i)"},{"t":"content","text":" the federally-subsidized amount with respect to such indebtedness, and","tail":"\n"}],"tail":"\n"},{"t":"clause","id":"/us/usc/t26/s143/m/7/B/ii","children":[{"t":"num","text":"(ii)"},{"t":"content","text":" the adjusted qualifying income (as defined in paragraph (5)) for each category of family size for each year of the 9-year period beginning on the date the financing was provided.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"para","id":"/us/usc/t26/s143/m/8","children":[{"t":"num","text":"(8)"},{"t":"heading","text":"Special rules"},{"t":"subpara","id":"/us/usc/t26/s143/m/8/A","children":[{"t":"num","text":"(A)"},{"t":"heading","text":"No basis adjustment"},{"t":"content","children":[{"t":"p","text":"No adjustment shall be made to the basis of any property for the increase in tax under this subsection.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/8/B","children":[{"t":"num","text":"(B)"},{"t":"heading","text":"Special rule where 2 or more persons hold interests in residence"},{"t":"content","children":[{"t":"p","text":"Except as provided in subparagraph (C) and in regulations prescribed by the Secretary, if 2 or more persons hold interests in any residence and are jointly liable for the federally-subsidized indebtedness, the recapture amount shall be determined separately with respect to their respective interests in the residence.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/8/C","children":[{"t":"num","text":"(C)"},{"t":"heading","text":"Transfers to spouses and former spouses"},{"t":"content","children":[{"t":"p","text":"Paragraph (1) shall not apply to any transfer on which no gain or loss is recognized under section 1041. In any such case, the transferee shall be treated under this subsection in the same manner as the transferor would have been treated had such transfer not occurred.","tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"subpara","id":"/us/usc/t26/s143/m/8/D","children":[{"t":"num","text":"(D)"},{"t":"heading","text":"Regulations"},{"t":"content","children":[{"t":"p","text":"The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out this subsection, including regulations dealing with dispositions of partial interests in a residence.","tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"}],"tail":"\n"},{"t":"text","text":"\n"},{"t":"text","text":"\n"}]}]}