A bill to authorize guarantees for bonds and notes issued for community or economic development purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Full Faith and Credit in Our 
Communities Act of 2007''.

SEC. 2. GUARANTEES FOR BONDS AND NOTES ISSUED FOR COMMUNITY OR ECONOMIC 
              DEVELOPMENT PURPOSES.

    The Community Development Banking and Financial Institutions Act of 
1994 (12 U.S.C. 4701 et seq.) is amended by inserting after section 114 
the following:

``SEC. 114A. GUARANTEES FOR BONDS AND NOTES ISSUED FOR COMMUNITY OR 
              ECONOMIC DEVELOPMENT PURPOSES.

    ``(a) Definitions.--In this section, the following definitions 
shall apply:
            ``(1) Director.--The term `Director' means the Director of 
        the Community Development Financial Institutions Fund.
            ``(2) Eligible community development financial 
        institution.--The term `eligible community development 
        financial institution' means a community development financial 
        institution that is organized as a private, not-for-profit 
        association, or otherwise on a nonprofit basis, that has 
        applied to an issuer for, or been granted by an issuer, a loan 
        or note under the Program.
            ``(3) Eligible community or economic development purpose.--
        The term `eligible community or economic development purpose'--
                    ``(A) means any purpose described in section 
                108(b); and
                    ``(B) includes the provision of community or 
                economic development in low-income or underserved rural 
                areas.
            ``(4) Guarantee.--The term `guarantee' means a written 
        agreement between the Secretary and a guaranteed note or 
        bondholder, pursuant to which, the Secretary ensures repayment 
        of the verifiable losses on any bond issue of the principal, 
        interest, and call premium, if any, on the guaranteed notes or 
        bonds of the issuer.
            ``(5) Issuer.--
                    ``(A) In general.--The term `issuer' means a 
                community development financial institution that has 
                been approved by the Secretary to receive a guarantee 
                under the Program, and that otherwise meets the 
                qualification requirements of this section and the 
                rules of the Secretary.
                    ``(B) Approval criteria for issuers.--
                            ``(i) In general.--The Secretary shall 
                        approve a community development financial 
                        institution for a guarantee under the Program 
                        in accordance with such terms and procedures as 
                        the Secretary establishes, by rule, for such 
                        purpose.
                            ``(ii) Terms and qualifications.--For 
                        approval as an issuer under the Program, a 
                        community development financial institution 
                        shall--
                                    ``(I) have appropriate expertise, 
                                capacity, and experience, or otherwise 
                                be qualified to make loans for eligible 
                                community or economic development 
                                purposes;
                                    ``(II) provide to the Secretary an 
                                acceptable capital distribution plan 
                                that meets the requirements of this 
                                section; and
                                    ``(III) certify to the Secretary 
                                that the bonds or notes to be 
                                guaranteed are to be used for eligible 
                                community or economic development 
                                purposes.
                    ``(C) Department opinion; timing.--
                            ``(i) Department opinion.--Not later than 
                        30 days after the date of a request by an 
                        issuer for approval of a guarantee under the 
                        Program, the General Counsel of the Fund shall 
                        provide to the Secretary an opinion regarding 
                        compliance by the issuer with the requirements 
                        of the Program under this section.
                            ``(ii) Timing.--The Secretary shall approve 
                        or deny a guarantee under this section after 
                        consideration of the opinion provided to the 
                        Secretary under clause (i), and in no case 
                        later than 45 days after receipt of all 
                        required information is submitted to the 
                        Secretary with respect to a request for such 
                        guarantee.
            ``(6) Loan.--The term `loan' means any credit instrument 
        that is extended under the Program for any eligible community 
        or economic development purpose.
            ``(7) Master servicer.--
                    ``(A) In general.--The term `master servicer' means 
                any entity approved by the Secretary in accordance with 
                subparagraph (B) to oversee the activities of 
                servicers, as provided in subsection (g)(4).
                    ``(B) Approval criteria for master servicers.--The 
                Secretary shall approve or deny any application to 
                become a master servicer under the Program not later 
                than 30 days after the date on which all required 
                information is submitted to the Secretary, based on the 
                capacity and experience of the applicant in--
                            ``(i) loan administration, servicing, and 
                        loan monitoring;
                            ``(ii) managing regional or national loan 
                        intake, processing, or servicing operational 
                        systems and infrastructure;
                            ``(iii) managing regional or national 
                        originator communication systems and 
                        infrastructure;
                            ``(iv) developing and implementing training 
                        and other risk management strategies on a 
                        regional or national basis; and
                            ``(v) compliance monitoring, investor 
                        relations, and reporting.
            ``(8) Program.--The term `Program' means the guarantee 
        program for tax-exempt bonds and notes issued for eligible 
        community or economic development purposes created by this 
        section.
            ``(9) Program administrator.--The term `program 
        administrator' means an entity designated by the issuer to 
        perform various administrative duties, as provided in 
        subsection (g)(2).
            ``(10) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(11) Servicer.--The term `servicer' means an entity 
        designated by the issuer to perform various servicing duties, 
        as provided in subsection (g)(3).
    ``(b) Guarantees Authorized.--The Secretary shall guarantee 
payments on tax-exempt bonds or notes issued by any issuer approved for 
such purpose under subsection (a)(5)(B), if the proceeds of the bonds 
or notes are used in accordance with this section to make loans to 
eligible community development financial institutions--
            ``(1) for eligible community or economic development 
        purposes; or
            ``(2) to refinance loans or notes issued for such purposes.
    ``(c) Issuer Requirements and Authority.--
            ``(1) In general.--The capital distribution plan required 
        by subsection (a)(5)(B) shall reflect investment of not less 
        than 90 percent of the principal amount of guaranteed bonds or 
        notes in otherwise unencumbered loans for any eligible 
        community or economic development purpose, measured annually, 
        beginning at the end of year 1 of the Program.
            ``(2) Relending account.--Not more than 10 percent of the 
        principal amount of guaranteed bonds or notes, multiplied by an 
        amount equal to the outstanding principal balance of issued 
        notes or bonds, minus the risk-share pool amount under 
        subsection (e), may be held in a relending account and may be 
        made available for new eligible community or economic 
        development purposes.
            ``(3) Limitations on unpaid principal balances.--The unpaid 
        principal balance of the issued bonds or notes that are 
        guaranteed under the Program may not be used to pay fees, and 
        shall be held in--
                    ``(A) community or economic development loans;
                    ``(B) a relending account, to the extent authorized 
                under paragraph (2); or
                    ``(C) a risk-share pool established under 
                subsection (e).
            ``(4) Repayment.--If an issuer fails to meet the 
        requirements of paragraph (1), not later than 30 days after the 
        date on which such failure occurs, repayment shall be made on 
        the issued bonds or notes to bring the issuer into compliance.
            ``(5) Prohibited uses.--The Secretary shall, by 
        regulation--
                    ``(A) prohibit, as appropriate, certain uses of 
                amounts from the guarantee of a bond or note under the 
                Program, including the use of such funds for political 
                activities, lobbying, outreach, counseling services, or 
                travel expenses; and
                    ``(B) provide that the guarantee of a bond or note 
                under the Program may not be used for salaries or other 
                administrative costs of--
                            ``(i) the issuer; or
                            ``(ii) any recipient of amounts from the 
                        guarantee of a bond or note.
    ``(d) Certain Interest Rate Reductions Authorized.--An eligible 
community development financial institution or an issuer may use a bond 
or note issued under the Program, or the proceeds from a guarantee of 
such a bond or note, as applicable, to reduce the interest rate on a 
loan, if the loan is made by an issuer to an eligible community 
development financial institution for any community or economic 
development purpose.
    ``(e) Risk-Share Pool.--Each issuer shall, during the term of a 
guarantee provided under the Program, establish a risk-share pool, 
capitalized by an amount equal to not less than 3 percent of the 
guaranteed amount outstanding on the subject notes and bonds.
    ``(f) Guarantees.--
            ``(1) In general.--A guarantee issued under the Program 
        shall--
                    ``(A) be for the full amount of a bond or note, 
                including the amount of principal, interest, and call 
                premiums;
                    ``(B) be fully assignable and transferable to the 
                Federal Financing Bank or the capital market, on terms 
                and conditions that are consistent with comparable 
                Government-guaranteed bonds, and satisfactory to the 
                Secretary;
                    ``(C) represent the full faith and credit of the 
                United States; and
                    ``(D) have a final maturity date for the bonds not 
                to exceed 40 years.
            ``(2) Limitations.--
                    ``(A) Annual number of guarantees.--The Secretary 
                shall issue not more than 5 guarantees in any calendar 
                year under the Program.
                    ``(B) Guarantee amount.--The Secretary may not 
                guarantee any amount under the Program equal to less 
                than $100,000,000, but the total of all such guarantees 
                in any fiscal year may not exceed $1,000,000,000.
    ``(g) Servicing of Transactions.--
            ``(1) In general.--To maximize efficiencies and minimize 
        cost and interest rates, loans made under this section may be 
        serviced by qualified program administrators, bond servicers, 
        and a master servicer.
            ``(2) Duties of program administrator.--The duties of a 
        program administrator shall include--
                    ``(A) approving and qualifying eligible community 
                development financial institution applications for 
                participation in the Program;
                    ``(B) compliance monitoring;
                    ``(C) bond packaging in connection with the 
                Program; and
                    ``(D) all other duties and related services that 
                are customarily expected of a program administrator.
            ``(3) Duties of servicer.--The duties of a servicer shall 
        include--
                    ``(A) billing and collecting loan payments;
                    ``(B) initiating collection activities on past-due 
                loans;
                    ``(C) transferring loan payments to the master 
                servicing accounts;
                    ``(D) loan administration and servicing;
                    ``(E) systematic and timely reporting of loan 
                performance through remittance and servicing reports;
                    ``(F) proper measurement of annual outstanding loan 
                requirements; and
                    ``(G) all other duties and related services that 
                are customarily expected of servicers.
            ``(4) Duties of master servicer.--The duties of a master 
        servicer shall include--
                    ``(A) tracking the movement of funds between the 
                accounts of the master servicer and any other servicer;
                    ``(B) ensuring orderly receipt of the monthly 
                remittance and servicing reports of the servicer;
                    ``(C) monitoring the collection comments and 
                foreclosure actions;
                    ``(D) aggregating the reporting and distribution of 
                funds to trustees and investors;
                    ``(E) removing and replacing a servicer, as 
                necessary;
                    ``(F) loan administration and servicing;
                    ``(G) systematic and timely reporting of loan 
                performance compiled from all bond servicers' reports;
                    ``(H) proper distribution of funds to investors; 
                and
                    ``(I) all other duties and related services that 
                are customarily expected of a master servicer.
    ``(h) Fees.--
            ``(1) In general.--An issuer that receives a guarantee 
        issued under this section on a bond or note shall pay a fee to 
        the Director, in an amount equal to 30 basis points of the 
        amount of the unpaid principal of the bond or note guaranteed.
            ``(2) Payment.--An issuer shall pay the fee required under 
        this subsection on a semiannual basis.
            ``(3) Fund subaccount created.--Fees collected under this 
        subsection shall be--
                    ``(A) deposited into a separate subaccount in the 
                Fund;
                    ``(B) awarded to eligible community development 
                financial institutions through a competitive grant 
                process, in accordance with sections 103(5) and 105 and 
                regulations issued thereunder, or to an eligible 
                community partnership, in accordance with sections 
                103(7) and 106 and regulations issued thereunder;
                    ``(C) limited to eligible community or economic 
                development purposes; and
                    ``(D) committed for use by the Fund within 2 years 
                of the date of receipt from the issuer.
    ``(i) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated, 
        such sums as are necessary to carry out this section.
            ``(2) Use of fees.--To the extent that the amount of funds 
        appropriated for a fiscal year under paragraph (1) are not 
        sufficient to carry out this section, the Director may use up 
        to 20 percent of the fees collected under subsection (h) for 
        the cost of providing guarantees of bonds and notes under this 
        section before depositing the remainder of the fees into the 
        Fund subaccount established under subsection (h).
    ``(j) Administration.--
            ``(1) Regulations.--Not later than 180 days after the date 
        of enactment of this section, the Secretary shall promulgate 
        regulations to carry out this section.
            ``(2) Implementation.--Not later than 240 days after the 
        date of enactment of this section, the Secretary shall 
        implement this section.
    ``(k) Termination.--This section is repealed, and the authority 
provided under this section shall terminate, on September 30, 2012.''.

Summary: Full Faith and Credit in Our Communities Act of 2007 - Amends the Community Banking and Financial Institutions Act of 1994 to require the Secretary of the Treasury to guarantee payments on tax-exempt bonds or notes issued by any approved issuer if their proceeds are used to make loans to eligible community development financial institutions: (1) for eligible community or economic development purposes. Or (2) to refinance loans or notes issued for such purposes. Lists among such community or economic development purposes, especially in low-income or underserved rural areas, developing or supporting: (1) commercial facilities that promote revitalization, community stability, or job creation or retention. (2) businesses that provide jobs for low-income people or are owned by low-income people, or enhance the availability of products and services to them, (3) community facilities, (4) the provision of basic financial services. And (5) housing that is principally affordable to low-income people. Specifies that assistance used to facilitate homeownership shall only be used for services and lending products that: (1) serve low-income people. And (2) are not provided by other lenders in the area, or complement the services and lending products provided by other lenders that serve the investment area or targeted population. Authorizes an eligible community development financial institution or an issuer to use a bond or note to reduce the interest rate on a loan made by an issuer to an eligible community development financial institution for any community or economic development purpose. Requires each issuer, during the term of a guarantee, to establish a risk-share pool meeting certain criteria. Requires any issuer receiving a guarantee on a bond or note to pay a specified fee to the Director of the Community Development Financial Institutions Fund.