SHARED APPRECIATION MORTGAGES.

SEC. 1261. SHARED APPRECIATION MORTGAGES. (a) Bankruptcy Safe Harbor.—Section 856(j) (relating to treatment of shared appreciation mortgages) is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: “(4) Coordination with 4-year holding period.—111 STAT. 1036 “(A) In general.—For purposes of section 857(b)(6)(C), if a real estate investment trust is treated as having sold secured property under paragraph (3)(A), the trust shall be treated as having held such property for at least 4 years if— “(i) the secured property is sold or otherwise disposed of pursuant to a case under title 11 of the United States Code, “(ii) the seller is under the jurisdiction of the court in such case, and “(iii) the disposition is required by the court or is pursuant to a plan approved by the court. “(B) Exception.—Subparagraph (A) shall not apply if— “(i) the secured property was acquired by the seller with the intent to evict or foreclose, or “(ii) the trust knew or had reason to know that default on the obligation described in paragraph (5)(A) would occur.”. (b) Clarification of Definition of Shared Appreciation Provision.—Clause (ii) of section 856(j)(5)(A) is amended by inserting before the period “or appreciation in value as of any specified date”.