SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural Multifamily Rental Housing 
Loan Guarantee Demonstration Act''.

SEC. 2. LOAN GUARANTEES FOR MULTIFAMILY RENTAL HOUSING IN RURAL AREAS.

    Title V of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) is 
amended by inserting after section 537 the following new section:

``SEC. 538. LOAN GUARANTEES FOR MULTIFAMILY RENTAL HOUSING IN RURAL 
              AREAS.

    ``(a) Authority.--The Secretary may make commitments to guarantee 
eligible loans for the development costs of eligible housing and 
related facilities, and may guarantee such eligible loans, in 
accordance with this section.
    ``(b) Extent of Guarantee.--A guarantee made under this section 
shall guarantee repayment of an amount not exceeding the total of the 
amount of the unpaid principal and interest of the loan for which the 
guarantee is made. The liability of the United States under any 
guarantee under this section shall decrease or increase pro rata with 
any decrease or increase of the amount of the unpaid portion of the 
obligation.
    ``(c) Eligible Borrowers.--A loan guaranteed under this section may 
be made to a nonprofit organization, an agency or body of any State 
government or political subdivision thereof, or a private entity.
    ``(d) Eligible Housing.--A loan may be guaranteed under this 
section only if the loan is used for the development costs of housing 
and related facilities (as such terms are defined in section 515(e)) 
that--
            ``(1) consists of 5 or more adequate dwellings;
            ``(2) is available for occupancy only by low or moderate 
        income families or persons, whose incomes at the time of 
        initial occupancy do not exceed 115 percent of the median 
        income of the area, as determined by the Secretary;
            ``(3) will remain available as provided in paragraph (2), 
        according to such binding commitments as the Secretary may 
        require, for the period of the original term of the loan 
        guaranteed, unless the housing is acquired by foreclosure (or 
        instrument in lieu of foreclosure) or the Secretary waives the 
        applicability of such requirement for the loan only after 
        determining, based on objective information, that--
                    ``(A) there is no longer a need for low- and 
                moderate-income housing in the market area in which the 
                housing is located;
                    ``(B) housing opportunities for low-income 
                households and minorities will not be reduced as a 
                result of the waiver; and
                    ``(C) additional Federal assistance will not be 
                necessary as a result of the waiver; and
            ``(4) is located in a rural area.
    ``(e) Eligible Lenders.--
            ``(1) Requirement.--A loan may be guaranteed under this 
        subsection only if the loan is made by a lender that the 
        Secretary determines--
                    ``(A) meets the qualifications, and has been 
                approved by the Secretary of Housing and Urban 
                Development, to make loans for multifamily housing that 
                are to be insured under the National Housing Act;
                    ``(B) meets the qualifications, and has been 
                approved by the Federal National Mortgage Association 
                and the Federal Home Loan Mortgage Corporation, to make 
                loans for multifamily housing that are to be sold to 
                such corporations; or
                    ``(C) meets any qualifications that the Secretary 
                may, by regulation, establish for participation of 
                lenders in the loan guarantee program under this 
                section.
            ``(2) Eligibility list and annual audit.--The Secretary 
        shall establish a list of eligible lenders and shall annually 
        conduct an audit of each lender included in the list for 
        purposes of determining whether such lender continues to be an 
        eligible lender.
    ``(f) Loan Terms.--Each loan guaranteed pursuant to this subsection 
shall--
            ``(1) provide for complete amortization by periodic 
        payments to be made for a term not to exceed 40 years;
            ``(2) involve a rate of interest agreed upon by the 
        borrower and the lender that does not exceed the maximum 
        allowable rate established by the Secretary for purposes of 
        this section and is fixed over the term of the loan;
            ``(3) involve a principal obligation (including initial 
        service charges, appraisal, inspection, and other fees as the 
        Secretary may approve) not to exceed--
                    ``(A) in the case of a borrower that is a nonprofit 
                organization or an agency or body of any State or local 
                government, 97 percent of the development costs of the 
                housing and related facilities or the value of the 
                housing and facilities, whichever is less;
                    ``(B) in the case of a borrower that is a for-
                profit entity not referred to in subparagraph (A), 90 
                percent of the development costs of the housing and 
                related facilities or the value of the housing and 
                facilities, whichever is less; and
                    ``(C) in the case of any borrower, for such part of 
                the property as may be attributable to dwelling use, 
                the applicable maximum per unit dollar amount 
                limitations under section 207(c) of the National 
                Housing Act;
            ``(4) be secured by a first mortgage on the housing and 
        related facilities for which the loan is made, or otherwise, as 
        the Secretary may determine necessary to ensure repayment of 
        the obligation; and
            ``(5) for at least 20 percent of the loans made under this 
        section, the Secretary shall provide the borrower with 
        assistance in the form of credits pursuant to section 
        521(a)(1)(B) to the extent necessary to reduce the rate of 
        interest under paragraph (2) to the applicable Federal rate, as 
        such term is used in section 42(i)(2)(D) of the Internal 
        Revenue Code of 1986.
    ``(g) Guarantee Fee.--At the time of issuance of a loan guaranteed 
under this section, the Secretary may collect from the lender a fee 
equal to not more than 1 percent of the principal obligation of the 
loan.
    ``(h) Authority for Lenders To Issue Certificates of Guarantee.--
The Secretary may authorize certain eligible lenders to determine 
whether a loan meets the requirements for guarantee under this section 
and, subject to the availability of authority to enter into guarantees 
under this section, execute a firm commitment for a guarantee binding 
upon the Secretary and issue a certificate of guarantee evidencing a 
guarantee, without review and approval by the Secretary of the specific 
loan. The Secretary may establish standards for approving eligible 
lenders for a delegation of authority under this subsection.
    ``(i) Payment Under Guarantee.--
            ``(1) Notice of default.--In the event of default by the 
        borrower on a loan guaranteed under this section, the holder of 
        the guarantee certificate for the loan shall provide written 
        notice of the default to the Secretary.
            ``(2) Foreclosure.--After receiving notice under paragraph 
        (1) and providing written notice of action under this paragraph 
        to the Secretary, the holder of the guarantee certificate for 
        the loan may initiate foreclosure proceedings for the loan in a 
        court of competent jurisdiction, in accordance with regulations 
        issued by the Secretary, to obtain possession of the security 
        property. After the court issues a final order authorizing 
        foreclosure on the property, the holder of the certificate 
        shall be entitled to payment by the Secretary under the 
        guarantee (in the amount provided under subsection (b)) upon 
        (A) conveyance to the Secretary of title to the security 
        property, (B) submission to the Secretary of a claim for 
        payment under the guarantee, and (C) assignment to the 
        Secretary of all the claims of the holder of the guarantee 
        against the borrower or others arising out of the loan 
        transaction or foreclosure proceedings, except claims released 
        with the consent of the Secretary.
            ``(3) Assignment by secretary.--After receiving notice 
        under paragraph (1), the Secretary may accept assignment of the 
        loan if the Secretary determines that the assignment is in the 
        best interests of the United States. Assignment of a loan under 
        this paragraph shall include conveyance to the Secretary of 
        title to the security property, assignment to the Secretary of 
        all rights and interests arising under the loan, and assignment 
        to the Secretary of all claims against the borrower or others 
        arising out of the loan transaction. Upon assignment of a loan 
        under this paragraph, the holder of a guarantee certificate for 
        the loan shall be entitled to payment by the Secretary under 
        the guarantee (in the amount provided under subsection (b)).
            ``(4) Requirements.--Before any payment under a guarantee 
        is made under paragraph (2) or (3), the holder of the guarantee 
        certificate shall exhaust all reasonable possibilities of 
        collection on the loan guaranteed. Upon payment, in whole or in 
        part, to the holder, the note or judgment evidencing the debt 
        shall be assigned to the United States and the holder shall 
        have no further claim against the borrower or the United 
        States. The Secretary shall then take such action to collect as 
        the Secretary determines appropriate.
    ``(j) Violation of Guarantee Requirements by Lenders Issuing 
Guarantees.--
            ``(1) Indemnification.--If the Secretary determines that a 
        loan guaranteed by an eligible lender pursuant to delegation of 
        authority under subsection (h) was not originated in accordance 
        with the requirements under this section and the Secretary pays 
        a claim under the guarantee for the loan, the Secretary may 
        require the eligible lender authorized under subsection (h) to 
        issue the guarantee certificate for the loan--
                    ``(A) to indemnify the Secretary for the loss, if 
                the payment under the guarantee was made within a 
                reasonable period specified by the Secretary; or
                    ``(B) to indemnify the Secretary for the loss 
                regardless of when payment under the guarantee was 
                made, if the Secretary determines that fraud or 
                misrepresentation was involved in connection with the 
                origination of the loan.
            ``(2) Termination of authority to issue guarantees.--The 
        Secretary may cancel a delegation of authority under subsection 
        (h) to an eligible lender if the Secretary determines that the 
        lender has violated the requirements and procedures for 
        guaranteed loans under this section or for other good cause. 
        Any such cancellation shall be made by giving notice to the 
        eligible lender and shall take effect upon receipt of the 
        notice by the mortgagee or at a later date, as the Secretary 
        may provide. A decision by the Secretary to cancel a delegation 
        shall be final and conclusive and shall not be subject to 
        judicial review.
    ``(k) Refinancing.--Any loan guaranteed under this section may be 
refinanced and extended in accordance with terms and conditions that 
the Secretary shall prescribe, but in no event for an additional amount 
or term that exceeds the limitations under subsection (f).
    ``(l) Nonassumption.--The borrower under a loan that is guaranteed 
under this section and under which any portion of the principal 
obligation or interest remains outstanding may not be relieved of 
liability with respect to the loan, notwithstanding the transfer of 
property for which the loan was made.
    ``(m) Geographical Targeting.--
            ``(1) Study.--The Secretary shall provide for an 
        independent entity to conduct a study to determine the extent 
        to which borrowers in the United States will utilize loan 
        guarantees under this section, the rural areas in the United 
        States in which borrowers can best utilize and most need loans 
        guaranteed under this section, and the rural areas in the 
        United States in which housing of the type eligible for a loan 
        guarantee under this section is most needed by low- and 
        moderate-income families. The Secretary shall require the 
        independent entity conducting the study to submit a report to 
        the Secretary and to the Congress describing the results of the 
        study not later than the expiration of the 90-day period 
        beginning on the date of the enactment of the Rural Multifamily 
        Rental Housing Loan Guarantee Demonstration Act.
            ``(2) Targeting.--In providing loan guarantees under this 
        section, the Secretary shall establish standards to target and 
        give priority to rural areas in which borrowers can best 
        utilize and most need loans guaranteed under this section, as 
        determined by the Secretary based on the results of the study 
        under paragraph (1) and any other information the Secretary 
        considers appropriate.
    ``(n) Inapplicability of Credit-Elsewhere Test.--Section 501(c) 
shall not apply to guarantees, or loans guaranteed, under this section.
    ``(o) Tenant Protections.--The Secretary shall establish standards 
for the treatment of tenants of housing developed using amounts from a 
loan guaranteed under this section, which shall incorporate, to the 
extent applicable, existing standards applicable to tenants of housing 
developed with loans made under section 515. Such standards shall 
include standards for fair housing and equal opportunity, lease and 
grievance procedures, and tenant appeals of adverse actions.
    ``(p) Housing Standards.--The standards established under section 
515(m) for housing and related facilities assisted under section 515 
shall apply to housing and related facilities the development costs of 
which are financed in whole or in part with a loan guaranteed under 
this section.
    ``(q) Limitation on Commitments To Guarantee Loans.--
            ``(1) Requirement of appropriations.--The authority of the 
        Secretary to enter into commitments to guarantee loans under 
        this section, and to guarantee loans, shall be effective for 
        any fiscal year only to the extent or in such amounts as are or 
        have been provided in appropriations Acts for such fiscal year.
            ``(2) Limitation on projects and outstanding aggregate 
        principal amount.--Subject to the limitation in paragraph (1), 
        the Secretary may enter into commitments to guarantee loans 
        under this section for not more than 25 housing projects in 
        each of fiscal years 1995 and 1996, having an aggregate 
        outstanding principal amount not exceeding $50,000,000 in each 
        of such fiscal years.
    ``(r) Report.--
            ``(1) In general.--The Secretary shall submit a report to 
        the Congress, not later than the expiration of the 2-year 
        period beginning on the date of the enactment of the Rural 
        Multifamily Rental Housing Loan Guarantee Demonstration Act, 
        describing the program under this section for guaranteeing 
        loans.
            ``(2) Contents.--The report shall--
                    ``(A) describe the types of borrowers providing 
                housing with loans guaranteed under this section, the 
                areas served by the housing provided and the 
                geographical distribution of the housing, the levels of 
                income of the residents of the housing, the number of 
                dwelling units provided, the extent to which borrowers 
                under such loans have obtained other financial 
                assistance for development costs of housing provided 
                with the loans, and the extent to which borrowers under 
                such loans have used low-income housing tax credits 
                provided under section 42 of the Internal Revenue Code 
                of 1986 in connection with the housing provided with 
                the loans;
                    ``(B) analyze the financial viability of the 
                housing provided with loans guaranteed under this 
                section and the need for project-based rental 
                assistance for such housing;
                    ``(C) include any recommendations of the Secretary 
                for expanding or improving the program under this 
                section for guaranteeing loans; and
                    ``(D) include any other information regarding the 
                program for guaranteeing loans under this section that 
                the Secretary considers appropriate.
    ``(s) Definitions.--For purposes of this subsection, the following 
definitions shall apply:
            ``(1) The term `development cost' has the meaning given the 
        term in section 515(e).
            ``(2) The term `eligible lender' means a lender determined 
        by the Secretary to meet the requirements of subparagraph (A), 
        (B), (C), or (D) of subsection (e)(1).
            ``(3) The terms `housing' and `related facilities' have the 
        meanings given such terms in section 515(e).
    ``(t) Authorization of Appropriations.--There are authorized to be 
appropriated for fiscal years 1995 and 1996 such sums as may be 
necessary for costs (as such term is defined in section 502 of the 
Congressional Budget Act of 1974) of loan guarantees made under this 
section.
    ``(u) Termination Date.--A loan may not be guaranteed under this 
section after September 30, 1996.''.
Rural Multifamily Rental Housing Loan Guarantee Demonstration Act - Amends the Housing Act of 1949 to authorize the Secretary of Agriculture to guarantee eligible loans for the development costs of low or moderate income rural multifamily rental housing. 
Authorizes appropriations.
Rural Multifamily Rental Housing Loan Guarantee Demonstration Act