I

104TH CONGRESS

1ST SESSION H. R. 1691

To provide for innovative approaches for homeownership opportunity and

provide for the temporary extension of the rural rental housing program,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 24, 1995

Mr. LAZIO of New York introduced the following bill; which was referred to

the Committee on Banking and Financial Services

A BILL

To provide for innovative approaches for homeownership opportunity and provide for the temporary extension of

the rural rental housing program, 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 ‘‘Homesteading and

5 Neighborhood Restoration Act of 1995’’.
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1 SEC. 2. ASSISTANCE FOR HABITAT FOR HUMANITY AND

2 OTHER SELF-HELP HOUSING PROVIDERS.

3 (a) GRANT AUTHORITY.—The Secretary of Housing

4 and Urban Development shall, to the extent amounts are

5 available to carry out this section and the requirements

6 of this section are met, make grants for use in accordance

7 with this section to—

8 (1) Habitat for Humanity International, whose

9 organizational headquarters are located in Americus,

10 Georgia; and

11 (2) other national or regional organizations or

12 consortia that have experience in providing or facili13 tating self-help housing homeownership opportuni14 ties.

15 (b) GOALS AND ACCOUNTABILITY.—In making

16 grants under this section, the Secretary shall take such

17 actions as may be necessary to ensure that—

18 (1) assistance provided under this section is

19 used to facilitate and encourage innovative home20 ownership opportunities through the provision of

21 self-help housing, under which the homeowner con22 tributes a significant amount of sweat equity toward

23 the construction of the new dwelling;

24 (2) assistance provided under this section for

25 land acquisition and infrastructure development re-
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1 sults in the development of not less than 5000 new

2 dwellings;

3 (3) the dwellings constructed in connection with

4 assistance provided under this section are quality

5 dwellings that comply with local building and safety

6 codes and standards and are available at prices

7 below the prevailing market prices;

8 (4) the provision of assistance under this sec9 tion establishes and fosters a partnership between

10 the Federal Government and Habitat for Humanity

11 International, its affiliates, and other organizations

12 and consortia, resulting in efficient development of

13 affordable housing with minimal Governmental inter14 vention, limited Governmental regulation, and sig15 nificant involvement by private entities;

16 (5) activities to develop housing assisted pursu17 ant to this section involve community participation

18 similar to the homeownership program carried out

19 by Habitat for Humanity International, in which

20 volunteers assist in the construction of dwellings;

21 and

22 (6) dwellings are developed in connection with

23 assistance under this section on a geographically di24 verse basis, which includes areas having high hous25 ing costs, rural areas, and areas underserved by
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1 other homeownership opportunities that are popu2 lated by low-income families unable to otherwise af3 ford housing.

4 If, at any time, the Secretary determines that the goals

5 under this subsection cannot be met by providing assist6 ance in accordance with the terms of this section, the Sec7 retary shall immediately notify the applicable Committees

8 in writing of such determination and any proposed

9 changes for such goals or this section.

10 (c) ALLOCATION.—Of any amounts available for

11 grants under this section—

12 (1) 50 percent shall be used for a grant to the

13 organization specified in subsection (a)(1); and

14 (2) 50 percent shall be used for grants to orga15 nizations and consortia under subsection (a)(2).

16 (d) USE.—

17 (1) PURPOSE.—Amounts from grants made

18 under this section shall be used only for eligible ex19 penses in connection with developing new decent,

20 safe, and sanitary nonluxury dwellings in the United

21 States for families and persons who otherwise would

22 be unable to afford to purchase a dwelling.

23 (2) ELIGIBLE EXPENSES.—For purposes of

24 paragraph (1), the term ‘‘eligible expenses’’ means

25 costs only for the following activities:
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1 (A) LAND ACQUISITION.—Acquiring land

2 (including financing and closing costs).

3 (B) INFRASTRUCTURE IMPROVEMENT.—

4 Installing, extending, constructing, rehabilitat5 ing, or otherwise improving utilities and other

6 infrastructure.

7 Such term does not include any costs for the reha8 bilitation, improvement, or construction of dwellings.

9 (e) ESTABLISHMENT OF GRANT FUND.—

10 (1) IN GENERAL.—Any amounts from any

11 grant made under this section shall be deposited by

12 the grantee organization or consortium in a fund

13 that is established by such organization or consor14 tium for such amounts, administered by such organi15 zation or consortium, and available for use only for

16 the purposes under subsection (d). Any interest,

17 fees, or other earnings of the fund shall be deposited

18 in the fund and shall be considered grant amounts

19 for purposes of this section.

20 (2) ASSISTANCE TO HABITAT FOR HUMANITY

21 AFFILIATES.—Habitat for Humanity International

22 may use amounts in the fund established for such

23 organization pursuant to paragraph (1) the purposes

24 under subsection (d) by providing assistance from

25 the fund to local affiliates of such organization.
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1 (f) REQUIREMENTS FOR ASSISTANCE TO OTHER OR2 GANIZATIONS.—The Secretary may make a grant to an

3 organization or consortium under subsection (a)(2) only

4 pursuant to—

5 (1) an expression of interest by such organiza6 tion or consortia to the Secretary for a grant for

7 such purposes;

8 (2) a determination by the Secretary that the

9 organization or consortia has the capability and has

10 obtained financial commitments (or has the capacity

11 to obtain financial commitments) necessary to—

12 (A) develop not less than 50 dwellings in

13 connection with the grant amounts; and

14 (B) otherwise comply with a grant agree15 ment under subsection (i); and

16 (3) a grant agreement entered into under sub17 section (i).

18 (g) TREATMENT OF UNUSED AMOUNTS.—Upon the

19 expiration of the 6-month period beginning upon the Sec20 retary first providing notice of the availability of amounts

21 for grants under subsection (a)(2), the Secretary shall de22 termine whether the amount remaining from the aggre23 gate amount reserved under subsection (c)(2) exceeds the

24 amount needed to provide funding in connection with any

25 expressions of interest under subsection (f)(1) made by
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1 such date that are likely to result in grant agreements

2 under subsection (i). If the Secretary determines that such

3 excess amounts remain, the Secretary shall provide the ex4 cess amounts to Habitat for Humanity International by

5 making a grant to such organization in accordance with

6 this section.

7 (h) GEOGRAPHICAL DIVERSITY.—In using grant

8 amounts provided under subsection (a)(1), Habitat for

9 Humanity International shall make reasonable efforts to

10 ensure that the amounts are used in a manner that results

11 in national geographic diversity among housing developed

12 using such amounts. In making grants under subsection

13 (a)(2), the Secretary shall make reasonable efforts to en14 sure that grants are provided and grant amounts are used

15 in a manner that results in national geographic diversity

16 among housing developed using grant amounts under this

17 section.

18 (i) GRANT AGREEMENT.—A grant under this section

19 shall be made only pursuant to a grant agreement entered

20 into by the Secretary and the organization or consortia

21 receiving the grant, which shall—

22 (1) require such organization or consortia to

23 use grant amounts only as provided in this section;

24 (2) provide for the organization or consortia to

25 develop a specific and reasonable number of dwell-
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1 ings using the grant amounts, which number shall

2 be established taking into consideration costs and

3 economic conditions in the areas in which the dwell4 ings will be developed, but in no case shall be less

5 than 50;

6 (3) require the organization or consortia to use

7 the grant amounts in a manner that leverages other

8 sources of funding (other than grants under this sec9 tion), including private or public funds, in developing

10 the dwellings;

11 (4) require the organization or consortia to

12 comply with the other provisions of this section;

13 (5) in the case only of a grant under subsection

14 (a)(2), provide that if the organization or consortia

15 has not used any grant amounts within 24 months

16 after such amounts are first disbursed to the organi17 zation or consortia, the Secretary shall recapture

18 such unused amounts; and

19 (6) contain such other terms as the Secretary

20 may require to provide for compliance with sub21 section (b) and the requirements of this section.

22 (j) GRANT PAYMENTS.—

23 (1) 1-STEP DISBURSEMENT.—With respect to

24 any grant under subsection (a)(2) in an amount less

25 than $8,000,000, the Secretary shall make the total
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1 amount of the grant available to the grantee organi2 zation or consortia upon entering into the grant

3 agreement under subsection (i) and providing notice

4 under paragraph (3).

5 (2) 2-STEP DISBURSEMENT.—With respect to

6 the grant under subsection (a)(1) and any grant

7 under subsection (a)(2) in an amount equal to or ex8 ceeding $8,000,000, the Secretary shall disburse the

9 grant amounts in 2 equal payments, as follows:

10 (A) INITIAL PAYMENT.—The first payment

11 shall be made available to the grantee organiza12 tion or consortia upon entering into the grant

13 agreement under subsection (i) and providing

14 notice under paragraph (3).

15 (B) FINAL PAYMENT.—The second pay16 ment shall be made available to the organiza17 tion or consortia subject to the following re18 quirements:

19 (i) NOTICE.—The amounts may not

20 be made available until 30 days after the

21 Secretary certifies to the applicable Com22 mittees that the grant amounts provided

23 under subparagraph (A) to the organiza24 tion or consortia have been used in accord25 ance with this section to develop the new
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1 dwellings required under the grant agree2 ment.

3 (ii) FULFILLMENT OF GRANT AGREE4 MENT.—If the Secretary determines that

5 the organization or consortia has not, with6 in 24 months after amounts are first made

7 available under subparagraph (A) to the

8 organization or consortia, substantially ful9 filled the obligations under the grant

10 agreement, including development of the

11 appropriate number of dwellings under the

12 agreement, the Secretary shall provide any

13 undisbursed amounts remaining from such

14 grant to Habitat for Humanity Inter15 national by making a grant to such organi16 zation in accordance with this section.

17 (3) NOTIFICATION TO CONGRESS.—Notification

18 under this paragraph is written notification to the

19 applicable Committees of a grant, the amount of the

20 grant, and the terms of the grant agreement.

21 (4) FAILURE TO REPORT.—If at any time the

22 Secretary fails to report to the applicable Commit23 tees as required in this subsection, the Secretary

24 may not subsequently make any grant under this
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1 section and may not subsequently disburse any

2 amounts under any grant previously made.

3 (k) RECORDS AND AUDITS.—During the period be4 ginning upon the making of a grant under this section

5 and ending upon close-out of the grant under subsection

6 (l)—

7 (1) the grantee organization or consortia shall

8 keep such records and adopt such administrative

9 practices as the Secretary may require to ensure

10 compliance with the provisions of this section and

11 the grant agreement; and

12 (2) the Secretary and the Comptroller General

13 of the United States, and any of their duly author14 ized representatives shall have access for the purpose

15 of audit and examination to any books, documents,

16 papers, and records of the grantee organization or

17 consortia and its affiliates that are pertinent to the

18 grant made under this section.

19 (l) CLOSE-OUT.—

20 (1) IN GENERAL.—The Secretary shall close out

21 a grant made under this section upon determining

22 that the aggregate amount of any assistance pro23 vided from the fund established under subsection

24 (d)(1) by the grantee organization or consortium ex25 ceeds the amount of the grant. For purposes of this
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1 paragraph, any interest, fees, and other earnings of

2 the fund shall be excluded from the amount of the

3 grant.

4 (2) EFFECT.—After such close-out, no grantee

5 organization or consortia, or its affiliates, may be re6 quired to comply with any provision of this section

7 or the grant agreement or to account to the Sec8 retary for use of grant amounts.

9 (m) ENVIRONMENTAL REVIEW.—A grant under this

10 section shall be considered to be funds for a special project

11 for purposes of section 305(c) of the Multifamily Housing

12 Property Disposition Reform Act of 1994.

13 (n) REPORT TO CONGRESS.—Not later than 90 days

14 after close-out of all grants under this section is com15 pleted, the Secretary shall submit a report to the applica16 ble Committees describing the grants made under this sec17 tion, the grantees, the housing developed in connection

18 with the grant amounts, and the purposes for which the

19 grant amounts were used.

20 (o) DEFINITIONS.—For purposes of this section, the

21 following definitions shall apply:

22 (1) APPLICABLE COMMITTEES.—The term ‘‘ap23 plicable Committees’’ means the Committee on

24 Banking and Financial Services of the House of
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1 Representatives and the Committee on Banking,

2 Housing, and Urban Affairs of the Senate.

3 (2) SECRETARY.—The term ‘‘Secretary’’ means

4 the Secretary of Housing and Urban Development.

5 (3) UNITED STATES.—The term ‘‘United

6 States’’ includes the States of the United States, the

7 District of Columbia, the Commonwealth of Puerto

8 Rico, the Commonwealth of the Northern Mariana

9 Islands, Guam, the Virgin Islands, American Samoa,

10 and any other territory or possession of the United

11 States.

12 (p) FUNDING.—Of any amounts previously made

13 available for annual contributions for assisted housing,

14 $50,000,000 shall be used by the Secretary to carry out

15 this section. Any such amounts shall remain available for

16 such purposes until expended.

17 (q) REGULATIONS.—The Secretary shall issue any

18 final regulations necessary to carry out this section not

19 later than 30 days after the date of the enactment of this

20 Act. The regulations shall take effect upon issuance and

21 may not exceed, in length, 5 full pages in the Federal Reg22 ister.
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1 SEC. 3. EXTENSION OF MULTIFAMILY RURAL HOUSING

2 LOAN PROGRAM.

3 (a) AUTHORITY TO MAKE LOANS.—Section

4 515(b)(4) of the Housing Act of 1949 (42 U.S.C.

5 1485(b)(4)) is amended by striking ‘‘September 30, 1994’’

6 and inserting ‘‘September 30, 1995’’.

7 (b) SET-ASIDE FOR NONPROFIT ENTITIES.—The

8 first sentence of section 515(w)(1) of the Housing Act of

9 1949 is amended by striking ‘‘fiscal years 1993 and 1994’’

10 and inserting ‘‘fiscal year 1995’’.

11 SEC. 4. REFORMS FOR MULTIFAMILY RURAL HOUSING

12 LOAN PROGRAM.

13 (a) LIMITATION ON PROJECT TRANSFERS.—Section

14 515 of the Housing Act of 1949 (42 U.S.C. 1485) is

15 amended by inserting after subsection (g) the following

16 new subsection:

17 ‘‘(h) PROJECT TRANSFERS.—After the date of the

18 enactment of the Homesteading and Neighborhood Res19 toration Act of 1995, any interest in the ownership of a

20 project for which a loan is made or insured under this

21 section may be transferred only if the Secretary deter22 mines that such transfer would be in the best interests

23 of the tenants of the housing for which the loan was made

24 or insured and of the Federal Government.’’.

25 (b) EQUITY LOANS.—Section 515(t) of the Housing

26 Act of 1949 is amended—
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1 (1) by striking paragraphs (4) and (5); and

2 (2) by redesignating paragraphs (6) through

3 (8) as paragraphs (4) through (6), respectively.

4 (c) REPEAL OF PROHIBITIONS.—Section 515 of the

5 Housing Act of 1949 is amended by striking subsection

6 (z).

7 (d) LOCATION OF PROJECTS.—Section 532 of the

8 Housing Act of 1949 (42 U.S.C. 1490l) is amended—

9 (1) in subsection (a), by inserting ‘‘other than

10 assistance under section 515’’ after ‘‘in making as11 sistance’’; and

12 (2) by adding at the end the following new sub13 section:

14 ‘‘(c) ALLOCATION OF SECTION 515 LOANS.—

15 ‘‘(1) PROCEDURE.—The Secretary shall make

16 assistance under section 515 available pursuant to

17 an objective procedure established by the Secretary,

18 under which the Secretary shall identify counties

19 and communities having the greatest need for such

20 assistance and designate such counties and commu21 nities to receive such assistance. Under such proce22 dure, the Secretary shall use objective measures to

23 determine the need for rental housing assistance,

24 which may include the incidence of poverty, sub25 standard housing, lack of mortgage credit, lack or
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1 insufficient amount of affordable housing, and other

2 factors demonstrating a need for affordable housing.

3 ‘‘(2) INFORMATION.—The Secretary shall use

4 information from the decennial censuses of the

5 United States, relevant comprehensive affordable

6 housing strategies under section 105 of the Cran7 ston-Gonzalez National Affordable Housing Act, and

8 other reliable sources obtained by the Secretary

9 which demonstrate the need for affordable rental

10 housing in rural areas.

11 ‘‘(3) DESIGNATION.—A designation under para12 graph (1) shall not be effective for a period of more

13 than 3 years, but may be renewed by the Secretary

14 under the procedure under paragraph (1). The Sec15 retary shall cause to be published in the Federal

16 Register a list of areas designated under paragraph

17 (1) and a reasonable timetable for submission of

18 preapplications. The Secretary shall take such other

19 reasonable actions as the Secretary considers appro20 priate to notify the public of such designations.’’.

21 (e) EQUITY TAKEOUT LOANS TO EXTEND LOW-IN22 COME USE.—

23 (1) AUTHORITY AND LIMITATION.—Section

24 502(c)(4)(B)(iv) of the Housing Act of 1949 (42

25 U.S.C. 1472(c)(4)(B)(iv)) is amended by inserting
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1 before the period at the end the following: ‘‘or under

2 paragraphs (1) and (2) of section 514(j), except that

3 an equity loan referred to in this clause may not be

4 made available after the date of the enactment of

5 the Homesteading and Neighborhood Restoration

6 Act of 1995 unless the Secretary determines that

7 the other incentives available under this subpara8 graph are not adequate to provide a fair return on

9 the investment of the borrower, to prevent prepay10 ment of the loan insured under section 514 or 515,

11 or to prevent the displacement of tenants of the

12 housing for which the loan was made’’.

13 (2) APPROVAL OF ASSISTANCE.—Subparagraph

14 (C) of section 502(c)(4) of the Housing Act of 1949

15 is amended by striking the matter preceding clause

16 (i) and inserting the following:

17 ‘‘(C) APPROVAL OF ASSISTANCE.—The Secretary

18 may approve assistance under subparagraph (B) for as19 sisted housing only if the restrictive period has expired for

20 any loan for the housing made or insured under section

21 514 or 515 pursuant to a contract entered into after De22 cember 21, 1979, but before the date of the enactment

23 of the Department of Housing and Urban Development

24 Reform Act of 1989, and the Secretary determines that

25 the combination of assistance provided—’’.
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1 (3) TECHNICAL CORRECTION.—Section

2 515(c)(1) of the Housing Act of 1949 (42 U.S.C.

3 1485(c)(1)) is amended by striking ‘‘December 21,

4 1979’’ and inserting ‘‘December 15, 1989’’.

5 SEC. 5. LOAN GUARANTEES FOR MULTIFAMILY RENTAL

6 HOUSING IN RURAL AREAS.

7 (a) IN GENERAL.—Title V of the Housing Act of

8 1949 (42 U.S.C. 1471 et seq.) is amended by inserting

9 after section 537 the following new section:

10 ‘‘SEC. 538. LOAN GUARANTEES FOR MULTIFAMILY RENTAL

11 HOUSING IN RURAL AREAS.

12 ‘‘(a) AUTHORITY.—The Secretary may make commit13 ments to guarantee eligible loans for the development costs

14 of eligible housing and related facilities, and may guaran15 tee such eligible loans, in accordance with this section.

16 ‘‘(b) EXTENT OF GUARANTEE.—A guarantee made

17 under this section shall guarantee repayment of an

18 amount not exceeding the total of the amount of the un19 paid principal and interest of the loan for which the guar20 antee is made. The liability of the United States under

21 any guarantee under this section shall decrease or increase

22 pro rata with any decrease or increase of the amount of

23 the unpaid portion of the obligation.

24 ‘‘(c) ELIGIBLE BORROWERS.—A loan guaranteed

25 under this section may be made to a nonprofit organiza-
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1 tion, an agency or body of any State government or politi2 cal subdivision thereof, or a private entity.

3 ‘‘(d) ELIGIBLE HOUSING.—A loan may be guaran4 teed under this section only if the loan is used for the

5 development costs of housing and related facilities (as

6 such terms are defined in section 515(e)) that—

7 ‘‘(1) consists of 5 or more adequate dwellings;

8 ‘‘(2) is available for occupancy only by low or

9 moderate income families or persons, whose incomes

10 at the time of initial occupancy do not exceed 115

11 percent of the median income of the area, as deter12 mined by the Secretary;

13 ‘‘(3) will remain available as provided in para14 graph (2), according to such binding commitments

15 as the Secretary may require, for the period of the

16 original term of the loan guaranteed, unless the

17 housing is acquired by foreclosure (or instrument in

18 lieu of foreclosure) or the Secretary waives the appli19 cability of such requirement for the loan only after

20 determining, based on objective information, that—

21 ‘‘(A) there is no longer a need for low- and

22 moderate-income housing in the market area in

23 which the housing is located;
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1 ‘‘(B) housing opportunities for low-income

2 households and minorities will not be reduced

3 as a result of the waiver; and

4 ‘‘(C) additional Federal assistance will not

5 be necessary as a result of the waiver; and

6 ‘‘(4) is located in a rural area.

7 ‘‘(e) ELIGIBLE LENDERS.—

8 ‘‘(1) REQUIREMENT.—A loan may be guaran9 teed under this section only if the loan is made by

10 a lender that the Secretary determines—

11 ‘‘(A) meets the qualifications, and has been

12 approved by the Secretary of Housing and

13 Urban Development, to make loans for multi14 family housing that are to be insured under the

15 National Housing Act;

16 ‘‘(B) meets the qualifications, and has

17 been approved by the Federal National Mort18 gage Association and the Federal Home Loan

19 Mortgage Corporation, to make loans for multi20 family housing that are to be sold to such cor21 porations; or

22 ‘‘(C) meets any qualifications that the Sec23 retary may, by regulation, establish for partici24 pation of lenders in the loan guarantee program

25 under this section.
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1 ‘‘(2) ELIGIBILITY LIST AND ANNUAL AUDIT.—

2 The Secretary shall establish a list of eligible lenders

3 and shall annually conduct an audit of each lender

4 included in the list for purposes of determining

5 whether such lender continues to be an eligible lend6 er.

7 ‘‘(f) LOAN TERMS.—Each loan guaranteed pursuant

8 to this section shall—

9 ‘‘(1) provide for complete amortization by peri10 odic payments to be made for a term not to exceed

11 40 years;

12 ‘‘(2) involve a rate of interest agreed upon by

13 the borrower and the lender that does not exceed the

14 maximum allowable rate established by the Secretary

15 for purposes of this section and is fixed over the

16 term of the loan;

17 ‘‘(3) involve a principal obligation (including

18 initial service charges, appraisal, inspection, and

19 other fees as the Secretary may approve) not to ex20 ceed—

21 ‘‘(A) in the case of a borrower that is a

22 nonprofit organization or an agency or body of

23 any State or local government, 97 percent of

24 the development costs of the housing and relat-
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1 ed facilities or the value of the housing and fa2 cilities, whichever is less;

3 ‘‘(B) in the case of a borrower that is a

4 for-profit entity not referred to in subparagraph

5 (A), 90 percent of the development costs of the

6 housing and related facilities or the value of the

7 housing and facilities, whichever is less; and

8 ‘‘(C) in the case of any borrower, for such

9 part of the property as may be attributable to

10 dwelling use, the applicable maximum per unit

11 dollar amount limitations under section 207(c)

12 of the National Housing Act;

13 ‘‘(4) be secured by a first mortgage on the

14 housing and related facilities for which the loan is

15 made, or otherwise, as the Secretary may determine

16 necessary to ensure repayment of the obligation; and

17 ‘‘(5) for at least 20 percent of the loans made

18 under this section, the Secretary shall provide the

19 borrower with assistance in the form of credits pur20 suant to section 521(a)(1)(B) to the extent nec21 essary to reduce the rate of interest under para22 graph (2) to the applicable Federal rate, as such

23 term is used in section 42(i)(2)(D) of the Internal

24 Revenue Code of 1986.
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1 ‘‘(g) GUARANTEE FEE.—At the time of issuance of

2 a loan guaranteed under this section, the Secretary may

3 collect from the lender a fee equal to not more than 1

4 percent of the principal obligation of the loan.

5 ‘‘(h) AUTHORITY FOR LENDERS TO ISSUE CERTIFI6 CATES OF GUARANTEE.—The Secretary may authorize

7 certain eligible lenders to determine whether a loan meets

8 the requirements for guarantee under this section and,

9 subject to the availability of authority to enter into guar10 antees under this section, execute a firm commitment for

11 a guarantee binding upon the Secretary and issue a certifi12 cate of guarantee evidencing a guarantee, without review

13 and approval by the Secretary of the specific loan. The

14 Secretary may establish standards for approving eligible

15 lenders for a delegation of authority under this subsection.

16 ‘‘(i) PAYMENT UNDER GUARANTEE.—

17 ‘‘(1) NOTICE OF DEFAULT.—In the event of de18 fault by the borrower on a loan guaranteed under

19 this section, the holder of the guarantee certificate

20 for the loan shall provide written notice of the de21 fault to the Secretary.

22 ‘‘(2) FORECLOSURE.—After receiving notice

23 under paragraph (1) and providing written notice of

24 action under this paragraph to the Secretary, the

25 holder of the guarantee certificate for the loan may
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1 initiate foreclosure proceedings for the loan in a

2 court of competent jurisdiction, in accordance with

3 regulations issued by the Secretary, to obtain posses4 sion of the security property. After the court issues

5 a final order authorizing foreclosure on the property,

6 the holder of the certificate shall be entitled to pay7 ment by the Secretary under the guarantee (in the

8 amount provided under subsection (b)) upon (A)

9 conveyance to the Secretary of title to the security

10 property, (B) submission to the Secretary of a claim

11 for payment under the guarantee, and (C) assign12 ment to the Secretary of all the claims of the holder

13 of the guarantee against the borrower or others aris14 ing out of the loan transaction or foreclosure pro15 ceedings, except claims released with the consent of

16 the Secretary.

17 ‘‘(3) ASSIGNMENT BY SECRETARY.—After re18 ceiving notice under paragraph (1), the Secretary

19 may accept assignment of the loan if the Secretary

20 determines that the assignment is in the best inter21 ests of the United States. Assignment of a loan

22 under this paragraph shall include conveyance to the

23 Secretary of title to the security property, assign24 ment to the Secretary of all rights and interests

25 arising under the loan, and assignment to the Sec-
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1 retary of all claims against the borrower or others

2 arising out of the loan transaction. Upon assignment

3 of a loan under this paragraph, the holder of a guar4 antee certificate for the loan shall be entitled to pay5 ment by the Secretary under the guarantee (in the

6 amount provided under subsection (b)).

7 ‘‘(4) REQUIREMENTS.—Before any payment

8 under a guarantee is made under paragraph (2) or

9 (3), the holder of the guarantee certificate shall ex10 haust all reasonable possibilities of collection on the

11 loan guaranteed. Upon payment, in whole or in part,

12 to the holder, the note or judgment evidencing the

13 debt shall be assigned to the United States and the

14 holder shall have no further claim against the bor15 rower or the United States. The Secretary shall then

16 take such action to collect as the Secretary deter17 mines appropriate.

18 ‘‘(j) VIOLATION OF GUARANTEE REQUIREMENTS BY

19 LENDERS ISSUING GUARANTEES.—

20 ‘‘(1) INDEMNIFICATION.—If the Secretary de21 termines that a loan guaranteed by an eligible lender

22 pursuant to delegation of authority under subsection

23 (h) was not originated in accordance with the re24 quirements under this section and the Secretary

25 pays a claim under the guarantee for the loan, the
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1 Secretary may require the eligible lender authorized

2 under subsection (h) to issue the guarantee certifi3 cate for the loan—

4 ‘‘(A) to indemnify the Secretary for the

5 loss, if the payment under the guarantee was

6 made within a reasonable period specified by

7 the Secretary; or

8 ‘‘(B) to indemnify the Secretary for the

9 loss regardless of when payment under the

10 guarantee was made, if the Secretary deter11 mines that fraud or misrepresentation was in12 volved in connection with the origination of the

13 loan.

14 ‘‘(2) TERMINATION OF AUTHORITY TO ISSUE

15 GUARANTEES.—The Secretary may cancel a delega16 tion of authority under subsection (h) to an eligible

17 lender if the Secretary determines that the lender

18 has violated the requirements and procedures for

19 guaranteed loans under this section or for other

20 good cause. Any such cancellation shall be made by

21 giving notice to the eligible lender and shall take ef22 fect upon receipt of the notice by the mortgagee or

23 at a later date, as the Secretary may provide. A de24 cision by the Secretary to cancel a delegation shall
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1 be final and conclusive and shall not be subject to

2 judicial review.

3 ‘‘(k) REFINANCING.—Any loan guaranteed under this

4 section may be refinanced and extended in accordance

5 with terms and conditions that the Secretary shall pre6 scribe, but in no event for an additional amount or term

7 that exceeds the limitations under subsection (f).

8 ‘‘(l) NONASSUMPTION.—The borrower under a loan

9 that is guaranteed under this section and under which any

10 portion of the principal obligation or interest remains out11 standing may not be relieved of liability with respect to

12 the loan, notwithstanding the transfer of property for

13 which the loan was made.

14 ‘‘(m) GEOGRAPHICAL TARGETING.—

15 ‘‘(1) STUDY.—The Secretary shall provide for

16 an independent entity to conduct a study to deter17 mine the extent to which borrowers in the United

18 States will utilize loan guarantees under this section,

19 the rural areas in the United States in which bor20 rowers can best utilize and most need loans guaran21 teed under this section, and the rural areas in the

22 United States in which housing of the type eligible

23 for a loan guarantee under this section is most need24 ed by low- and moderate-income families. The Sec25 retary shall require the independent entity conduct-
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1 ing the study to submit a report to the Secretary

2 and to the Congress describing the results of the

3 study not later than the expiration of the 90-day pe4 riod beginning on the date of the enactment of the

5 Homesteading and Neighborhood Restoration Act of

6 1995.

7 ‘‘(2) TARGETING.—In providing loan guaran8 tees under this section, the Secretary shall establish

9 standards to target and give priority to rural areas

10 in which borrowers can best utilize and most need

11 loans guaranteed under this section, as determined

12 by the Secretary based on the results of the study

13 under paragraph (1) and any other information the

14 Secretary considers appropriate.

15 ‘‘(n) INAPPLICABILITY OF CREDIT-ELSEWHERE

16 TEST.—Section 501(c) shall not apply to guarantees, or

17 loans guaranteed, under this section.

18 ‘‘(o) TENANT PROTECTIONS.—The Secretary shall

19 establish standards for the treatment of tenants of hous20 ing developed using amounts from a loan guaranteed

21 under this section, which shall incorporate, to the extent

22 applicable, existing standards applicable to tenants of

23 housing developed with loans made under section 515.

24 Such standards shall include standards for fair housing
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1 and equal opportunity, lease and grievance procedures,

2 and tenant appeals of adverse actions.

3 ‘‘(p) HOUSING STANDARDS.—The standards estab4 lished under section 515(m) for housing and related facili5 ties assisted under section 515 shall apply to housing and

6 related facilities the development costs of which are fi7 nanced in whole or in part with a loan guaranteed under

8 this section.

9 ‘‘(q) LIMITATION ON COMMITMENTS TO GUARANTEE

10 LOANS.—

11 ‘‘(1) REQUIREMENT OF APPROPRIATIONS FOR

12 COST SUBSIDY.—The authority of the Secretary to

13 enter into commitments to guarantee loans under

14 this section, and to guarantee loans, shall be effec15 tive for each fiscal year only to the extent that ap16 propriations of budget authority to cover the costs

17 (as such term is defined in section 502 of the Con18 gressional Budget Act of 1974) of the guarantees

19 are made in advance for such fiscal year.

20 ‘‘(2) ANNUAL LIMITATION ON AMOUNT OF

21 LOAN GUARANTEES.—In fiscal year 1995, the Sec22 retary may enter into commitments to guarantee

23 loans under this section only to the extent that the

24 costs of the guarantees entered into in such fiscal

25 year do not exceed $1,000,000.
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1 ‘‘(r) REPORT.—

2 ‘‘(1) IN GENERAL.—The Secretary shall submit

3 a report to the Congress, not later than the expira4 tion of the 2-year period beginning on the date of

5 the enactment of the Homesteading and Neighbor6 hood Restoration Act of 1995, describing the pro7 gram under this section for guaranteeing loans.

8 ‘‘(2) CONTENTS.—The report shall—

9 ‘‘(A) describe the types of borrowers pro10 viding housing with loans guaranteed under this

11 section, the areas served by the housing pro12 vided and the geographical distribution of the

13 housing, the levels of income of the residents of

14 the housing, the number of dwelling units pro15 vided, the extent to which borrowers under such

16 loans have obtained other financial assistance

17 for development costs of housing provided with

18 the loans, and the extent to which borrowers

19 under such loans have used low-income housing

20 tax credits provided under section 42 of the In21 ternal Revenue Code of 1986 in connection with

22 the housing provided with the loans;

23 ‘‘(B) analyze the financial viability of the

24 housing provided with loans guaranteed under
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1 this section and the need for project-based rent2 al assistance for such housing;

3 ‘‘(C) include any recommendations of the

4 Secretary for expanding or improving the pro5 gram under this section for guaranteeing loans;

6 and

7 ‘‘(D) include any other information regard8 ing the program for guaranteeing loans under

9 this section that the Secretary considers appro10 priate.

11 ‘‘(s) DEFINITIONS.—For purposes of this section, the

12 following definitions shall apply:

13 ‘‘(1) The term ‘development cost’ has the mean14 ing given the term in section 515(e).

15 ‘‘(2) The term ‘eligible lender’ means a lender

16 determined by the Secretary to meet the require17 ments of subparagraph (A), (B), (C), or (D) of sub18 section (e)(1).

19 ‘‘(3) The terms ‘housing’ and ‘related facilities’

20 have the meanings given such terms in section

21 515(e).

22 ‘‘(t) AUTHORIZATION OF APPROPRIATIONS.—There

23 is authorized to be appropriated for fiscal year 1995

24 $1,000,000 for costs (as such term is defined in section
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1 502 of the Congressional Budget Act of 1974) of loan

2 guarantees made under this section.

3 ‘‘(u) TERMINATION DATE.—A loan may not be guar4 anteed under this section after September 30, 1995.’’.

5 (b) EFFECT OF AUTHORIZING LEGISLATION.—The

6 enactment of this section shall be considered the enact7 ment of authorizing legislation referred to in the 3d undes8 ignated paragraph under the head ‘‘RURAL DEVELOP9 MENT ADMINISTRATION AND FARMERS HOME ADMINIS10 TRATION—RURAL HOUSING INSURANCE FUND PROGRAM

11 ACCOUNT’’ in title III of the Agriculture, Rural Develop12 ment, Food and Drug Administration, and Related Agen13 cies Appropriations Act, 1995 (Public Law 103–330, 108

14 Stat. 2454).

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