I

106TH CONGRESS

2D SESSION H. R. 5079

To amend section 502 of the Housing Act of 1949 to provide for the

prepayment of loans for rural multifamily housing and for the preservation of such housing as affordable for low-income families, and for

other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 2000

Mr. RAMSTAD introduced the following bill; which was referred to the

Committee on Banking and Financial Services

A BILL

To amend section 502 of the Housing Act of 1949 to provide

for the prepayment of loans for rural multifamily housing

and for the preservation of such housing as affordable

for low-income families, and for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Rural Housing Act

5 of 2000’’.
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1 SEC. 2. PREPAYMENT OF RURAL MULTIFAMILY HOUSING

2 LOANS.

3 Subsection (c) of section 502 of the Housing Act of

4 1949 (42 U.S.C. 1472(c)) is amended to read as follows:

5 ‘‘(c) PREPAYMENT OF LOANS AND PRESERVATION

6 OF AFFORDABLE HOUSING.—

7 ‘‘(1) LOANS MADE OR INSURED BEFORE DE8 CEMBER 22, 1979.—A loan made or insured under

9 section 514 or 515 of this title pursuant to a con10 tract entered into before December 22, 1979, may

11 be prepaid at any time without restriction.

12 ‘‘(2) LOANS MADE OR INSURED AFTER DECEM13 BER 21, 1979.—A loan made or insured under section

14 514 or 515 of this title pursuant to a contract en15 tered into after December 21, 1979, but before De16 cember 15, 1989, may be prepaid without restriction

17 only if—

18 ‘‘(A) 15 years have elapsed from the date

19 on which the loan was made or insured, if the

20 housing and related facilities have not received

21 assistance under paragraph (1)(B), (2), or (5)

22 of section 521(a) of this title or section 8 of the

23 United States Housing Act of 1937;

24 ‘‘(B) 20 years have elapsed from the date

25 on which the loan was made or insured, in the

26 case of any other such loan;
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1 ‘‘(C) the Secretary determines, before the

2 end of the period described in subparagraph (A)

3 or (B), that there is no longer a need for such

4 housing and related facilities or that Federal or

5 other financial assistance being provided to the

6 residents of such housing will no longer be pro7 vided; or

8 ‘‘(D) before the end of the period described

9 in subparagraph (A) or (B), the owner agrees

10 to extend the low income use restrictions for the

11 remainder of such period.

12 ‘‘(3) LOANS MADE OR INSURED AFTER DECEM13 BER 14, 1989.—A loan made or insured under section

14 514 or 515 of this title pursuant to a contract en15 tered into after December 14, 1989, may not be pre16 paid.

17 ‘‘(4) ALTERNATIVES TO PREPAYMENT.—A bor18 rower who is authorized to prepay a loan pursuant

19 to paragraph (1) or (2) may, in the sole discretion

20 of the borrower, request that—

21 ‘‘(A) the Secretary offer incentives pursu22 ant to paragraph (5); or

23 ‘‘(B) the housing and related facilities that

24 are subject to the loan be sold pursuant to
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1 paragraph (6) to a nonprofit organization or

2 public agency.

3 ‘‘(5) INCENTIVES.—

4 ‘‘(A) IN GENERAL.—If a borrower who is

5 authorized to prepay a loan pursuant to para6 graph (1) or (2) agrees to extend the low in7 come use of the assisted housing and related fa8 cilities involved for not less than the 20-year pe9 riod beginning on the date on which the agree10 ment is executed, the Secretary shall, subject to

11 the availability of amounts for such assistance

12 provided in advance in appropriation Acts, pro13 vide one or more of the following forms of as14 sistance:

15 ‘‘(i) INCREASED RETURN ON INVEST16 MENT.—An increase in the rate of return

17 on investment.

18 ‘‘(ii) REDUCED INTEREST RATE.—A

19 reduction of the interest rate on the loan

20 through the provision of interest credits

21 under section 521(a)(1)(B).

22 ‘‘(iii) ADDITIONAL RENTAL ASSIST23 ANCE.—Additional rental assistance, or an

24 increase in assistance provided under exist25 ing contracts, under section 521(a)(2) or
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1 under section 8 of the United States Hous2 ing Act of 1937.

3 ‘‘(iv) EQUITY LOAN.—An equity loan

4 to the borrower under paragraphs (1) and

5 (2) of section 515(c) or under section

6 515(t).

7 ‘‘(v) INCREMENTAL RENTAL ASSIST8 ANCE.—Incremental rental assistance in

9 connection with loans pursuant to clauses

10 (ii) and (iv) of this subparagraph to the

11 extent necessary to avoid increases in the

12 rental payments of current tenants not re13 ceiving rental assistance under section

14 521(a)(2) or under section 8 of the United

15 States Housing Act of 1937.

16 ‘‘(vi) EXCESS RENT.—In the case of a

17 project that has received rental assistance

18 under section 8 of the United States Hous19 ing Act of 1937, authority for the owner to

20 receive rent in excess of the amount deter21 mined necessary by the Secretary to defray

22 the cost of long-term repair or mainte23 nance of such a project.

24 ‘‘(B) FAILURE TO AGREE ON INCEN25 TIVES.—If the borrower does not agree to ex-
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1 tend the low income use of the assisted housing

2 and related facilities involved as provided under

3 subparagraph (A), the borrower may prepay the

4 loan pursuant to paragraph (1) or (2).

5 ‘‘(6) SALE TO NONPROFIT ORGANIZATIONS AND

6 PUBLIC AGENCIES.—If a borrower who is authorized

7 to prepay a loan pursuant to paragraph (1) or (2)

8 agrees to sell the assisted housing and related facili9 ties involved to a nonprofit organization or public

10 agency at fair market value, the Secretary, in order

11 to facilitate the sale, may take one or more of the

12 following actions:

13 ‘‘(A) ADVANCE FOR CERTAIN COSTS RE14 LATING TO ACQUISITION.—To the extent

15 amounts for advances under this clause are

16 made available in advance in appropriation

17 Acts, make an advance to the nonprofit organi18 zation or public agency whose offer to purchase

19 is accepted under this paragraph to cover any

20 direct costs (other than the purchase price) in21 curred by the organization or agency in pur22 chasing and assuming responsibility for the

23 housing and related facilities.

24 ‘‘(B) ASSUMPTION OF LOAN.—Approve the

25 assumption, by the nonprofit organization or
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1 public agency involved, of the loan made or in2 sured under section 514 or 515.

3 ‘‘(C) TRANSFER OF ASSISTANCE.—To the

4 extent provided in appropriation Acts, transfer

5 any rental assistance payments that are re6 ceived under section 521(a)(2)(A) or under sec7 tion 8 of the United States Housing Act of

8 1937, with respect to the housing and related

9 facilities, to the nonprofit organization or public

10 agency involved.

11 ‘‘(D) PURCHASE LOAN.—To the extent

12 budget authority for such loans is provided in

13 advance in appropriation Acts, provide a loan

14 under section 515(c)(3) to the nonprofit organi15 zation or public agency whose offer to purchase

16 is accepted under this paragraph to enable the

17 organization or agency to purchase the housing

18 and related facilities involved.

19 ‘‘(E) RENTAL ASSISTANCE.—To the extent

20 amounts for assistance under this clause are

21 provided in advance in appropriation Acts, pro22 vide to the nonprofit organization or public

23 agency purchasing the housing and related fa24 cilities financial assistance (in the form of

25 monthly payments or forgiveness of debt) in an
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1 amount necessary to ensure that the monthly

2 rent payment made by each low income family

3 or person residing in the housing does not ex4 ceed the maximum rent permitted under section

5 521(a)(2)(A).

6 ‘‘(7) FUNDING.—In addition to any other

7 amounts made available for providing incentives

8 under paragraph (5), any amounts resulting from

9 the prepayment of loans made or insured under sec10 tion 514 or 515 of this title shall be available, to the

11 extent provided in appropriation Acts, for providing

12 incentives under paragraph (5) and for costs of ac13 tions under paragraph (6) in connection with sale of

14 projects to nonprofit organizations and public agen15 cies. Such amounts shall be available first for the

16 uses described in the preceding sentence and if not

17 so used, then for other uses in accordance with other

18 provisions of law authorizing such use.

19 ‘‘(8) TENANT PROTECTION.—If a loan is pre20 paid pursuant to paragraph (1) or (2), the Secretary

21 shall offer tenant-based assistance under section 8 of

22 the United States Housing Act of 1937 to each low

23 income tenant residing in the housing involved at

24 the time of such prepayment, subject to the avail25 ability of appropriated amounts for such assistance.
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1 If after prepayment the rent for a dwelling unit in

2 such housing exceeds the applicable payment stand3 ard established pursuant to section 8(o) of such Act,

4 the assistance offered under this paragraph shall be

5 in the form of enhanced vouchers under section 8(t)

6 of such Act, subject to the availability of appro7 priated amounts for such assistance.’’.

8 SEC. 3. ENHANCED VOUCHER ELIGIBILITY.

9 Section 8(t)(2) of the United States Housing Act of

10 1937 (42 U.S.C. 1437f(t)(2)) is amended—

11 (1) by inserting ‘‘or loan’’ after ‘‘of the mort12 gage’’; and

13 (2) by inserting ‘‘section 502(c)(8) of the Hous14 ing Act of 1959 (42 U.S.C. 1472(c)(8)),’’ after ‘‘(12

15 U.S.C. 413(f)),’’.

16 SEC. 4. RURAL RENTAL HOUSING LOAN TERM.

17 In the case of a loan made or insured under section

18 515 of the Housing Act of 1949 pursuant to a contract

19 entered into before the date of the enactment of this Act,

20 if the Secretary of Agriculture and the borrower under the

21 loan agree to such applicability, the amendments made by

22 section 735(b)(3) of the Agriculture, Rural Development,

23 Food and Drug Administration, and Related Agencies Ap24 propriations Act, 1998 (Public Law 105–86; 111 Stat.

25 2110) shall apply to such loan. In no case shall the bor-
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1 rower be obligated to accept a new loan pursuant to sec2 tion 515(b)(7) of the Housing Act of 1949 for financing

3 the final payment of the original loan.

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