I

108TH CONGRESS

1ST SESSION H. R. 2189

To amend the Solid Waste Disposal Act to assist homeowners with properties

contaminated by leaking underground storage tanks in moving from

such properties on a temporary or permanent basis by authorizing the

Secretary of Housing and Urban Development to guarantee loans to

such homeowners.

IN THE HOUSE OF REPRESENTATIVES

MAY 21, 2003

Mr. KANJORSKI introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy

and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Solid Waste Disposal Act to assist homeowners

with properties contaminated by leaking underground

storage tanks in moving from such properties on a temporary or permanent basis by authorizing the Secretary

of Housing and Urban Development to guarantee loans

to such homeowners.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
2

•HR 2189 IH

1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Emergency Home Fi3 nancing Assistance Act’’.

4 SEC. 2. GUARANTEED LOAN PROGRAM.

5 (a) AMENDMENT.—Subtitle I of the Solid Waste Dis6 posal Act (42 U.S.C. 6991 et seq.) is amended by adding

7 at the end the following new section:

8 ‘‘HUD LOAN GUARANTEES FOR OWNERS OF HOMES

9 AFFECTED BY LEAKING UNDERGROUND STORAGE TANKS

10 ‘‘SEC. 9011. (a) PROGRAM AUTHORITY.—

11 ‘‘(1) IN GENERAL.—In accordance with the pro12 visions of this section, the Secretary of Housing and

13 Urban Development (in this section referred to as

14 the ‘Secretary’) may guarantee, and make commit15 ments to guarantee, loans made to homeowners

16 whose properties have been contaminated, and re17 duced in value, by leaking underground storage

18 tanks to assist such homeowners to obtain other

19 temporary or permanent residences or to obtain the

20 equity in the property for any other purpose.

21 ‘‘(2) ADMINISTRATION BY SPECIAL MASTER.—

22 The Secretary shall administer the loan guarantee

23 program under this section through a Special Mas24 ter, who shall be appointed by the Secretary. The

25 Special Master shall carry out all functions of the

26 Secretary under this section, including the promul-
3

•HR 2189 IH

1 gation of any substantive and procedural rules for

2 the administration of the program.

3 ‘‘(b) ELIGIBLE LOANS.—To be eligible to be guaran4 teed under this section, a loan shall meet the following

5 requirements:

6 ‘‘(1) USE.—The proceeds of the loan may be

7 used only for the purpose of—

8 ‘‘(A) acquiring, by purchase or lease, a

9 property consisting of one to four dwelling

10 units, which shall be occupied as the principal

11 residence of the borrower; or

12 ‘‘(B) obtaining the equity in the property

13 for any other purpose, to the extent provided

14 under paragraph (5)(C).

15 ‘‘(2) BORROWER.—The loan shall be made to a

16 borrower who is the owner of a qualified property

17 under subsection (c).

18 ‘‘(3) LENDER.—The loan shall be made by a

19 lender approved by and meeting qualifications estab20 lished by the Secretary. The following lenders are

21 deemed to be approved under this paragraph:

22 ‘‘(A) Any mortgagee approved by the Sec23 retary of Housing and Urban Development for

24 participation in the single family mortgage in-
4

•HR 2189 IH

1 surance program under title II of the National

2 Housing Act.

3 ‘‘(B) Any lender whose housing loans

4 under chapter 37 of title 38, United States

5 Code, are automatically guaranteed pursuant to

6 section 1802(d) of such title.

7 ‘‘(C) Any lender approved by the Secretary

8 of Agriculture to make guaranteed loans for

9 single family housing under the Housing Act of

10 1949.

11 ‘‘(D) Any other lender that is supervised,

12 approved, regulated, or insured by any agency

13 of the Federal Government.

14 ‘‘(4) SECURITY.—The loan shall be secured by

15 the qualified property of the borrower.

16 ‘‘(5) TERMS.—The loan shall—

17 ‘‘(A) be made for a term not exceeding 30

18 years;

19 ‘‘(B) bear interest (exclusive of the guar20 antee fee under subsection (e)(3) and service

21 charges, if any) at a rate agreed upon by the

22 borrower and the lender and determined by the

23 Secretary to be reasonable, which may not ex24 ceed the rate generally charged in the area (as

25 determined by the Secretary) for home mort-
5

•HR 2189 IH

1 gage loans not guaranteed or insured by any

2 agency or instrumentality of the Federal Gov3 ernment; and

4 ‘‘(C) involve a principal obligation not

5 exceeding—

6 ‘‘(i) the dollar amount limitation de7 termined under section 305(a)(2) of the

8 Federal Home Loan Mortgage Corporation

9 Act for a single-family residence (as such

10 limitation is adjusted annually);

11 ‘‘(ii) the amount approved by the Sec12 retary under this section; or

13 ‘‘(iii) 100 percent of the pre-release

14 fair market value of the qualified property

15 owned by the borrower, as determined by

16 the Secretary.

17 ‘‘(c) QUALIFIED PROPERTY.—For purposes of this

18 section, a qualified property is a one- to four-family resi19 dence that—

20 ‘‘(1) is located on real property on any part of

21 which is within an area that is affected by a release

22 from an underground storage tank, as determined

23 by the Secretary;

24 ‘‘(2) immediately before the making of the loan

25 guaranteed under this section, is the principal resi-
6

•HR 2189 IH

1 dence of the borrower under the loan (unless the

2 borrower has temporarily relocated to avoid the con3 sequences of the release referred to in paragraph

4 (1));

5 ‘‘(3) is determined by the Secretary to be cov6 ered by an agreement entered into under subsection

7 (d); and

8 ‘‘(4) is determined by the Secretary to be eligi9 ble for a loan guaranteed under this section.

10 ‘‘(d) AGREEMENTS WITH LOCAL HOUSING AGEN11 CIES TO MAINTAIN UNOCCUPIED PROPERTIES AND TAKE

12 TITLE.—An agreement under this subsection is a legally

13 binding agreement entered into between the Secretary and

14 a public housing agency (as such term is defined in section

15 3(b) of the United States Housing Act of 1937 (42 U.S.C.

16 1437a(b)) or other entity selected by the Secretary that

17 provides that—

18 ‘‘(1) in the case of a loan guaranteed under this

19 section under which the borrower maintains the bor20 rower’s interest in a qualified property located with21 in the jurisdiction of the public housing agency or

22 other such entity, the public housing agency or other

23 entity shall take any actions necessary to physically

24 maintain the qualified property during the period
7

•HR 2189 IH

1 that such property remains unoccupied by the bor2 rower;

3 ‘‘(2) in the case of a loan guaranteed under this

4 section under which the borrower does not retain the

5 borrower’s interest in a qualified property located

6 within the jurisdiction of the public housing agency

7 or other such entity, the public housing agency or

8 other entity shall take title to the qualified property

9 and shall take any actions necessary to physically

10 maintain the qualified property during any period

11 that the property remains unoccupied; and

12 ‘‘(3) in the event that the Secretary obtains

13 title to a qualified property located within the juris14 diction of the public housing agency or other such

15 entity, pursuant to a default on a loan guaranteed

16 under this section, the public housing agency or

17 other entity shall take title to the qualified property

18 from the Secretary and shall take any actions nec19 essary to physically maintain the qualified property

20 during any period that the property remains unoccu21 pied.

22 Nothing in this subsection may be construed to prevent

23 a public housing agency or other entity selected by the

24 Secretary, that enters into an agreement under this sub25 section, from entering into an agreement with another en-
8

•HR 2189 IH

1 tity to carry out any portion of the responsibilities of the

2 public housing agency or entity selected by the Secretary

3 under the agreement under this subsection.

4 ‘‘(e) GUARANTEE.—

5 ‘‘(1) LIMITATION.—The Secretary may not

6 guarantee, or make a commitment to guarantee, any

7 loan under this section in an amount exceeding 90

8 percent of the principal amount of the loan.

9 ‘‘(2) PRIVATE GUARANTEE OR INSURANCE.—To

10 be eligible for a guarantee under this section, any

11 portion of a loan that is not guaranteed by the Sec12 retary shall be covered by a guarantee or mortgage

13 insurance provided by a State or local agency or a

14 private mortgage insurer.

15 ‘‘(3) FEE.—The Secretary shall fix and collect

16 a guarantee fee for the guarantee of loans under this

17 section, which shall be a percentage of the principal

18 amount of the loan guaranteed under this section

19 that does not exceed the percentage allowable under

20 section 438(c)(2) of the Higher Education Act of

21 1965 (20 U.S.C. 1087–1(c)(2)) to be charged as an

22 origination fee under such section. The fee shall be

23 paid by the lender at time of issuance of the guar24 antee and shall be adequate, in the determination of

25 the Secretary, to cover expenses and probable losses.
9

•HR 2189 IH

1 The Secretary shall deposit any fees collected under

2 this subsection in the loan guarantee fund estab3 lished under subsection (i) of this section.

4 ‘‘(4) LIABILITY.—The liability under a guar5 antee provided under this section shall decrease or

6 increase on a pro rata basis according to any de7 crease or increase in the amount of the unpaid obli8 gation under the provisions of the loan agreement.

9 ‘‘(f) CERTIFICATE OF GUARANTEE.—

10 ‘‘(1) APPROVAL PROCESS.—Before the Sec11 retary approves any loan for guarantee under this

12 section, the lender shall submit the application for

13 the loan to the Secretary for examination. If the

14 Secretary approves the loan for guarantee, the Sec15 retary shall issue a certificate under this paragraph

16 as evidence of the guarantee.

17 ‘‘(2) STANDARD FOR APPROVAL.—The Sec18 retary may approve a loan for guarantee under this

19 section and issue a certificate under this paragraph

20 only if the Secretary determines there is a reason21 able prospect of repayment of the loan.

22 ‘‘(3) EFFECT.—A certificate of guarantee

23 issued under this paragraph by the Secretary shall

24 be conclusive evidence of the eligibility of the loan

25 for guarantee under the provisions of this section
10

•HR 2189 IH

1 and the amount of such guarantee. Such evidence

2 shall be incontestable in the hands of the bearer and

3 the full faith and credit of the United States is

4 pledged to the payment of all amounts agreed to be

5 paid by the Secretary as security for such obliga6 tions.

7 ‘‘(4) FRAUD AND MISREPRESENTATION.—This

8 subsection may not be construed to preclude the

9 Secretary from establishing defenses against the

10 original lender based on fraud or material misrepre11 sentation or to bar the Secretary from establishing

12 by regulations in effect on the date of issuance or

13 disbursement, whichever is earlier, partial defenses

14 to the amount payable on the guarantee.

15 ‘‘(g) TRANSFER AND ASSUMPTION.—Notwith16 standing any other provision of law, any loan guaranteed

17 under this section, including the security given for the

18 loan, may be sold or assigned by the lender to any finan19 cial institution subject to examination and supervision by

20 an agency of the Federal Government or of any State or

21 the District of Columbia.

22 ‘‘(h) PAYMENT UNDER GUARANTEE.—

23 ‘‘(1) NOTIFICATION OF DEFAULT.—In the event

24 of default by the borrower on a loan guaranteed

25 under this section, the holder of the guarantee cer-
11

•HR 2189 IH

1 tificate shall provide written notice of the default to

2 the Secretary.

3 ‘‘(2) PAYMENT OPTIONS.—Upon providing such

4 notice, the holder of the guarantee certificate shall

5 be entitled to payment under the guarantee (subject

6 to the provisions of this section) and may proceed to

7 obtain payment in one of the following manners:

8 ‘‘(A) FORECLOSURE.—The holder of the

9 certificate may initiate foreclosure proceedings

10 (after providing written notice of such action to

11 the Secretary) and upon a final order by the

12 court authorizing foreclosure and submission to

13 the Secretary of a claim for payment under the

14 guarantee, the Secretary shall pay to the holder

15 of the certificate the pro rata portion of the

16 amount guaranteed (as determined pursuant to

17 subsection (e)) plus reasonable fees and ex18 penses as approved by the Secretary. The Sec19 retary shall be subrogated to the rights of the

20 holder of the guarantee and the lender holder

21 shall assign the obligation and security to the

22 Secretary.

23 ‘‘(B) NO FORECLOSURE.—Without seeking

24 foreclosure (or in any case in which a fore25 closure proceeding initiated under subparagraph
12

•HR 2189 IH

1 (A) continues for a period in excess of 1 year),

2 the holder of the guarantee may submit to the

3 Secretary a request to assign the obligation and

4 security interest to the Secretary in return for

5 payment of the claim under the guarantee. The

6 Secretary may accept assignment of the loan if

7 the Secretary determines that the assignment is

8 in the best interests of the United States. Upon

9 assignment, the Secretary shall pay to the hold10 er of the guarantee the pro rata portion of the

11 amount guaranteed (as determined under sub12 section (e)). The Secretary shall be subrogated

13 to the rights of the holder of the guarantee and

14 the holder shall assign the obligation and secu15 rity to the Secretary.

16 ‘‘(3) REQUIREMENTS FOR PAYMENT.—Before

17 any payment under a guarantee is made under para18 graph (2), the holder of the guarantee shall exhaust

19 all reasonable possibilities of collection. Upon pay20 ment, in whole or in part, to the holder, the note or

21 judgment evidencing the debt shall be assigned to

22 the United States and the holder shall have no fur23 ther claim against the borrower or the United

24 States. The Secretary shall then take such action to

25 collect as the Secretary determines appropriate.
13

•HR 2189 IH

1 ‘‘(i) LOAN FORGIVENESS.—

2 ‘‘(1) MANDATORY.—With respect to any loan

3 guaranteed under this section:

4 ‘‘(A) PROLONGED CLEANUP.—If the period

5 that began upon identification of the release

6 from the underground storage tank that af7 fected the qualified property and ended upon

8 termination of environmental cleanup relating

9 to such release was eight or more years, the

10 Secretary shall take action under this sub11 section to forgive a portion of the borrower’s

12 obligation under the loan equal to the lesser

13 of—

14 ‘‘(i) the difference between the pre-re15 lease fair market value of the qualified

16 property and the fair market value of such

17 property at the time of such forgiveness;

18 and

19 ‘‘(ii) the outstanding amount of prin20 cipal and interest owed under the loan by

21 the borrower.

22 ‘‘(B) SUSTAINED DECREASE IN PROPERTY

23 VALUE.—

24 ‘‘(i) IN GENERAL.—If, during any pe25 riod described in clause (ii), the fair mar-
14

•HR 2189 IH

1 ket value of the qualified property has de2 creased from the pre-release fair market

3 value by at least the amount described in

4 such clause, and such decrease is directly

5 attributable to the release from the under6 ground storage tank that affected the

7 property, the Secretary shall take action

8 under this subsection to forgive a portion

9 of the borrower’s obligation under the loan

10 equal to the lesser of the amounts under

11 clauses (i) and (ii) of subparagraph (A).

12 ‘‘(ii) REQUIRED AMOUNT OF DE13 CREASE.—The periods and decreases in

14 value referred to in clause (i) are—

15 ‘‘(I) 50 percent during the 1-year

16 period beginning upon identification

17 of the release that affected the prop18 erty;

19 ‘‘(II) 45 percent during the 2-

20 year period beginning upon such iden21 tification;

22 ‘‘(III) 40 percent during the 3-

23 year period beginning upon such iden24 tification;
15

•HR 2189 IH

1 ‘‘(IV) 35 percent during the 4-

2 year period beginning upon such iden3 tification;

4 ‘‘(V) 30 percent during the 5-

5 year period beginning upon such iden6 tification;

7 ‘‘(VI) 25 percent during the 6-

8 year period beginning upon such iden9 tification; and

10 ‘‘(VII) 20 percent during the 7-

11 year period beginning upon such iden12 tification.

13 ‘‘(C) HEALTH EFFECTS.—If the Secretary

14 determines that a State or Federal health study

15 has indicated that there is a level of chronic or

16 terminal illness that (i) is directly related to ex17 posure to the petroleum or other chemicals re18 leased from an underground storage tank in a

19 release that affected the qualified property, and

20 (ii) is significantly higher than the level of such

21 illness among the general population, the Sec22 retary shall take action under this subsection to

23 forgive a portion of the borrower’s obligation

24 under the loan equal to the lesser of—
16

•HR 2189 IH

1 ‘‘(i) the pre-release fair market value

2 of the qualified property; and

3 ‘‘(ii) the outstanding amount of prin4 cipal and interest owed by the borrower.

5 In issuing regulations defining ‘significantly

6 higher’ for purposes of this subparagraph, the

7 Secretary shall consult with the Administrator

8 and the Secretary of Health and Human Serv9 ices.

10 ‘‘(2) DISCRETIONARY.—If, upon written appli11 cation to the Secretary, the Secretary determines

12 that the borrower under a loan guaranteed under

13 this section is unable to continue payments under

14 the loan due to the nature and extent of the release

15 affecting the qualified property, financial hardship,

16 demonstrated adverse health effects, or any other

17 factor that the Secretary determines indicates that

18 loan forgiveness under this section is appropriate,

19 the Secretary may take action under this subsection

20 to forgive all or part of the borrower’s obligation

21 under the loan.

22 ‘‘(3) ASSIGNMENT.—Upon a determination pur23 suant to paragraph (1) or (2), the Secretary shall

24 require the holder of the guarantee to assign the ob25 ligation and security interest to the Secretary in re-
17

•HR 2189 IH

1 turn for payment of the claim under the guarantee

2 equal to the pro rata portion of the amount guaran3 teed (as determined under subsection (e)). The Sec4 retary shall be subrogated to the rights of the holder

5 of the guarantee.

6 ‘‘(4) FORGIVENESS.—Pursuant to assignment

7 under paragraph (3), the Secretary shall cancel a

8 portion of the borrower’s obligation, which shall

9 be—

10 ‘‘(A) in the case of assignment pursuant to

11 a determination under paragraph (1), the por12 tion required under paragraph (1); or

13 ‘‘(B) in the case of assignment pursuant to

14 a determination under paragraph (2), such por15 tion as the Secretary considers appropriate.

16 ‘‘(j) LOAN GUARANTEE FUND.—

17 ‘‘(1) ESTABLISHMENT.—There is established in

18 the Treasury of the United States a loan guarantee

19 fund for the purpose of providing loan guarantees

20 under this section.

21 ‘‘(2) CREDITS.—The guarantee fund shall be

22 credited with—

23 ‘‘(A) any amounts, claims, notes, mort24 gages, and contracts acquired by the Secretary
18

•HR 2189 IH

1 under this section, and any collections and pro2 ceeds therefrom;

3 ‘‘(B) any amounts appropriated under

4 paragraph (7);

5 ‘‘(C) any guarantee fees collected under

6 subsection (e)(3); and

7 ‘‘(D) any interest or earnings on amounts

8 invested under paragraph (4).

9 ‘‘(3) USE.—Amounts in the guarantee fund

10 shall be available, to the extent provided in appro11 priation Acts, for—

12 ‘‘(A) fulfilling any obligations of the Sec13 retary with respect to loans guaranteed under

14 this section, including the costs (as such term

15 is defined in section 502 of the Congressional

16 Budget Act of 1974) of such loans;

17 ‘‘(B) paying taxes, insurance, prior liens,

18 expenses necessary to make fiscal adjustment in

19 connection with the application and transmittal

20 of collections, and other expenses and advances

21 to protect the Secretary for loans which are

22 guaranteed under this section or held by the

23 Secretary;

24 ‘‘(C) acquiring such security property at

25 foreclosure sales or otherwise; and
19

•HR 2189 IH

1 ‘‘(D) paying administrative expenses in

2 connection with this section.

3 ‘‘(4) INVESTMENT.—Any amounts in the guar4 antee fund that the Secretary determines are in ex5 cess of amounts currently required to carry out this

6 section may be invested in obligations of the United

7 States.

8 ‘‘(5) LIMITATION ON COMMITMENTS TO GUAR9 ANTEE LOANS AND MORTGAGES.—

10 ‘‘(A) REQUIREMENT OF APPROPRIA11 TIONS.—The authority of the Secretary to enter

12 into commitments to guarantee loans under this

13 section shall be effective for any fiscal year to

14 the extent or in such amounts as are or have

15 been provided in appropriation Acts, without re16 gard to the fiscal year for which such amounts

17 were appropriated.

18 ‘‘(B) LIMITATIONS ON COSTS OF GUARAN19 TEES.—The authority of the Secretary to enter

20 into commitments to guarantee loans under this

21 section shall be effective for any fiscal year only

22 to the extent that amounts in the guarantee

23 fund are or have been made available in appro24 priation Acts to cover the costs (as such term

25 is defined in section 502 of the Congressional
20

•HR 2189 IH

1 Budget Act of 1974) of such loan guarantees

2 for such fiscal year. Any amounts appropriated

3 pursuant to this subparagraph shall remain

4 available until expended.

5 ‘‘(C) LIMITATION ON OUTSTANDING AG6 GREGATE PRINCIPAL AMOUNT.—Subject to the

7 limitations in subparagraphs (A) and (B), the

8 Secretary may enter into commitments to guar9 antee loans under this section in each fiscal

10 year with an aggregate outstanding principal

11 amount not exceeding such amount as may be

12 provided in appropriation Acts for such fiscal

13 year.

14 ‘‘(6) LIABILITIES.—All liabilities and obliga15 tions of the assets credited to the guarantee fund

16 under paragraph (2)(A) shall be liabilities and obli17 gations of the guarantee fund.

18 ‘‘(7) AUTHORIZATION OF APPROPRIATIONS.—

19 There are authorized to be appropriated to the guar20 antee fund such sums as may be necessary to carry

21 out this section.’’.

22 (b) TABLE OF CONTENTS AMENDMENT.—The table

23 of contents for subtitle I of the Solid Waste Disposal Act

24 is amended by adding at the end the following new item:

‘‘Sec. 9011. HUD loan guarantees for owners of homes affected by leaking underground storage tanks.’’.
21

•HR 2189 IH

1 (c) REGULATIONS.—Not later than one year after the

2 date of the enactment of this Act, the Secretary of Hous3 ing and Urban Development shall issue any regulations

4 necessary to carry out this Act, which shall include regula5 tions setting forth guidelines for loan forgiveness pursuant

6 to section 9011(i)(2) of the Solid Waste Disposal Act (as

7 added by the amendment made by subsection (a) of this

8 section).

Æ