Transforming Student Debt to Home Equity Act of 2017

Summary: Transforming Student Debt to Home Equity Act of 2017 This bill requires the Department of Housing and Urban Development (HUD) and the Federal Housing Finance Agency&nbsp;to jointly establish and implement a pilot demonstration program to provide, to eligible applicants with federal student loan debt, assistance in purchasing eligible properties. Specifically, the program may provide for: (1) discounts on the appraised value of eligible properties, (2) flexibility in certain underwriting standards, (3) the development of new mortgage products specifically targeted to eligible applicants, (4) the development of a program that uses actuarial information to determine how the repayment of federal student loans may be integrated into a mortgage repayment schedule to allow eligible applicants to accumulate home equity, and (5) other appropriate assistance. An "eligible property" is a property: (1) that is designed as a dwelling&nbsp;for occupancy by one to four families; (2) that is safe and habitable; (3) the occupancy of which will promote community revitalization; and (4) that is owned by HUD, the Federal National Mortgage Association (Fannie Mae), or the Federal Home Loan Mortgage Corporation (Freddie Mac).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Transforming Student Debt to Home 
Equity Act of 2017''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) In the fourth quarter of 2016, over 17,200,000 homes 
        remain vacant in the United States.
            (2) These extended vacancies depress neighborhood property 
        values and create a downward spiral in neighborhood stability 
        in already troubled communities.
            (3) Meanwhile, due to climbing expenses of higher 
        education, the total Federal student debt owed equals 
        $1,300,000,000.
            (4) More than 40,000,000 Americans have at least one 
        outstanding student loan, up dramatically from 29,000,000 
        Americans just 10 years ago.
            (5) Student loan repayments are forcing millions of young 
        families out of purchasing their first home, as they cannot 
        afford to save for a down payment or qualify for a mortgage.
            (6) It is imperative to find a way to systematically 
        convert debt streams into equity streams, otherwise housing 
        purchases will continue to be sluggish and thousands more 
        Americans will retire saddled with student loan debt never 
        having had the opportunity to accumulate equity.
            (7) It is in the interest of the Federal Government to use 
        the resources at its disposal, including both housing 
        properties held in trust and student debt obligations, to put 
        reverse pressure on these downward trends.
            (8) By arranging financing that recalculates terms, debt-
        to-income ratios, mortgage interest rates, and other factors, 
        short-term student debt could transition into longer term home 
        ownership.
            (9) The goal is to connect creditworthy Federal student 
        debt holders with housing properties for sale but held by the 
        Federal Government.
            (10) Eventually, participants can help restore 
        neighborhoods, transform their debt to equity, and buy property 
        values locally and on the Federal ledger simply by maintaining 
        and investing in a home mortgage.

SEC. 3. PROGRAM TO EXPAND ACCESS TO MORTGAGES TO ELIGIBLE CREDITWORTHY 
              HOMEBUYERS WITH FEDERAL STUDENT LOAN DEBT.

    (a) Establishment.--From amounts appropriated pursuant to 
subsection (g), the Secretary of the Department of Housing and Urban 
Development and the Director of the Federal Housing Finance Agency 
shall jointly establish and carry out a pilot demonstration program to 
provide assistance to eligible applicants in purchasing eligible 
properties.
    (b) Eligible Applicants.--To be eligible for the program 
established in this Act, an applicant--
            (1) shall have an outstanding balance of principal or 
        interest owing on a loan made, insured, or guaranteed under 
        title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et 
        seq.);
            (2) may not be subject to a judgment secured through 
        litigation with respect to such a loan under title IV of the 
        Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), may not 
        be subject to an order for wage garnishment under section 488A 
        of such Act (20 U.S.C. 1095a), and at the time of application 
        for participation in the program under this section--
                    (A) such a loan shall be in repayment status as 
                determined under section 428(b)(7)(A) of such Act (20 
                U.S.C. 1078(b)(7)(A)); or
                    (B) such a loan shall be in a grace period 
                preceding repayment;
            (3) may not have owned a home during the 3-year period 
        immediately before the applicant purchases an eligible property 
        with assistance provided under this Act;
            (4) shall complete a program of counseling with respect to 
        the responsibilities and financial management involved in 
        homeownership that is approved by the Secretary;
            (5) shall be creditworthy, as determined by the Secretary 
        and the Director;
            (6) shall agree to use an eligible property purchased with 
        assistance provided under this Act as the applicant's primary 
        residence for not less than the 3-year period beginning on the 
        date of such purchase; and
            (7) shall be employed and earning sufficient income to 
        repay a mortgage loan, as determined by the Secretary and the 
        Director for the purposes of this program.
    (c) Types of Assistance.--
            (1) In general.--A program established under this Act may 
        provide for any one or more of the following options:
                    (A) A discount on the appraised value of an 
                eligible property.
                    (B) Flexibility in underwriting standards related 
                to the purchase of eligible properties for mortgages 
                insured under title II of the National Housing Act (12 
                U.S.C. 1707 et seq.) or owned or guaranteed by the 
                Federal National Mortgage Association or the Federal 
                Home Loan Mortgage Corporation.
                    (C) The development of new mortgage products 
                specifically targeted to eligible applicants.
                    (D) In coordination with the Department of the 
                Treasury and the Department of Education, the 
                development of a program that will use actuarial 
                information to determine how the repayment of loans 
                described in subsection (b)(1) may be integrated into a 
                mortgage repayment schedule to allow an eligible 
                applicant to accumulate equity in the eligible 
                property, including by reason of meeting the eligible 
                applicant's obligations under such student loan.
                    (E) Any other assistance that the Secretary and 
                Director jointly deem appropriate.
            (2) Collaboration.--In providing assistance described under 
        paragraph (1), the Secretary and the Director may collaborate 
        with community banks having less than $10,000,000,000 in total 
        assets, credit unions (as defined in section 101 of the Federal 
        Credit Union Act), and local fair housing organizations.
    (d) Geographical Diversity.--In selecting eligible applicants to 
receive assistance under this Act, the Secretary and the Director 
shall, to the extent practicable, consider the location of the eligible 
property to be purchased by the eligible applicant, including whether 
the eligible property is located in a rural or urban area, to ensure 
geographic diversity of such eligible properties.
    (e) Reports.--
            (1) Interim report.--Not later than 90 days after the date 
        of the enactment of this Act, the Secretary and the Director 
        shall submit to Congress an interim report describing the type 
        of assistance the Secretary and the Director shall provide 
        under the program established under this Act.
            (2) Final report.--Not later than 3 years after the date of 
        the enactment of this Act, the Secretary and the Director shall 
        submit to Congress a final report evaluating the impact of the 
        program carried out under this Act and describing other types 
        of assistance the Secretary and the Director may offer.
    (f) Definitions.--In this Act:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of the Department of Housing and Urban Development.
            (3) Eligible property.--The term ``eligible property'' 
        means a property that is designed as a dwelling for occupancy 
        by 1 to 4 families--
                    (A) that is safe and habitable, as defined by the 
                Secretary and the Director;
                    (B) for which, as determined by the Secretary and 
                the Director, the occupancy of which will promote 
                community revitalization; and
                    (C) that--
                            (i) was previously subject to a mortgage 
                        loan insured by the Federal Housing 
                        Administration under title II of the National 
                        Housing Act (12 U.S.C. 1707 et seq.) and is 
                        owned by the Secretary pursuant to the payment 
                        of insurance benefits under such Act; or
                            (ii) is a real estate owned property of the 
                        Federal National Mortgage Association or the 
                        Federal Home Loan Mortgage Corporation.
    (g) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as necessary to carry out this Act for fiscal 
years 2018 to 2020.