69–006 

110TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 110–616 

NEIGHBORHOOD STABILIZATION ACT OF 2008 

MAY 1, 2008.—Committed to the Committee of the Whole House on the State of the 

Union and ordered to be printed 

Mr. FRANK of Massachusetts, from the Committee on Financial 

Services, submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 5818] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 5818) to authorize the Secretary of Housing and Urban 

Development to make loans to States to acquire foreclosed housing 

and to make grants to States for related costs, having considered 

the same, report favorably thereon with an amendment and recommend that the bill as amended do pass. 

CONTENTS 

Page 

Amendment .............................................................................................................. 2 

Purpose and Summary ............................................................................................ 11 

Background and Need for Legislation .................................................................... 12 

Hearings ................................................................................................................... 14 

Committee Consideration ........................................................................................ 15 

Committee Votes ...................................................................................................... 15 

Committee Oversight Findings ............................................................................... 19 

Performance Goals and Objectives ......................................................................... 19 

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 19 

Committee Cost Estimate ....................................................................................... 20 

Congressional Budget Office Estimate ................................................................... 20 

Federal Mandates Statement ................................................................................. 22 

Advisory Committee Statement .............................................................................. 22 

Constitutional Authority Statement ...................................................................... 23 

Applicability to Legislative Branch ........................................................................ 23 

Earmark Identification ............................................................................................ 23 

Section-by-Section Analysis of the Legislation ...................................................... 23 


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Dissenting Views ..................................................................................................... 30 

AMENDMENT

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Neighborhood Stabilization Act 

of 2008’’. (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title and table of contents. 

Sec. 2. Congressional purposes. 

Sec. 3. Loans and grants to States. 

Sec. 4. Qualified plans. 

Sec. 5. Allocation of amounts. 

Sec. 6. Loans. 

Sec. 7. Grants. 

Sec. 8. Eligible housing stimulus activities. 

Sec. 9. Shared appreciation agreement. 

Sec. 10. Spending requirements. 

Sec. 11. Servicer contact. 

Sec. 12. Accountability. 

Sec. 13. Definitions. 

Sec. 14. Funding. 

Sec. 15. Regulations and implementation. 

SEC. 2. CONGRESSIONAL PURPOSES. 

The purposes of this Act are— (1) to establish a loan and grant program administered by the Department 

of Housing and Urban Development to help States, metropolitan cities, and 

urban counties purchase and rehabilitate owner-vacated, foreclosed homes with 

the goal of stabilizing and occupying them as soon as possible, either through 

resale or rental to qualified families; 

(2) to distribute these loans and grants to areas with the highest levels of 

foreclosure and delinquent subprime mortgages; 

(3) to provide incentives for States, metropolitan cities, and urban counties to 

use the funds to stabilize as many properties as possible; and 

(4) to provide housing for low- and moderate-income families, especially those 

that have lost homes to foreclosure. 

SEC. 3. LOANS AND GRANTS TO STATES. 

The Secretary of Housing and Urban Development shall, subject to the availability of amounts under section 14, make grants under section 5(a) to qualified 

States and make loans under section 6 in accordance with the approved plans of 

qualified States, for use to carry out eligible housing stimulus activities under section 8. 

SEC. 4. QUALIFIED PLANS. 

(a) IN GENERAL.—The Secretary may make a grant under this Act only to a State, 

and may allocate a loan authority amount under this Act only for a State, that has 

submitted to the Secretary a plan that meets the requirements under this section 

and has been approved under this section. A State shall reallocate amounts under 

subsection (f) or (g) of section 5 only to a qualified metropolitan city or qualified 

urban county, respectively, that has submitted to the Secretary a plan that meets 

the requirements under this section and has been approved under this section. 

(b) CONTENTS.—A plan under this section for an allocation recipient shall—

(1) designate a housing finance agency of the allocation recipient, or other 

agency, department, or entity of the allocation recipient, or any other designee, 

as the allocation recipient administrator to act on behalf of the allocation recipient for purposes of this Act; 

(2) describe the housing stimulus activities under section 8 to be carried out 

with assistance under this Act for the allocation recipient by the entity identified pursuant to paragraph (1) of this subsection; 

(3) prioritize the allocation of funds to low- and moderate-income neighborhoods with high concentrations of foreclosures and describe how such activities 

will help restore or improve the viability of such neighborhoods by providing for 

purchase or occupancy of qualified foreclosed properties as soon as practicable 

and in a manner that will facilitate repayment of the loans provided under this 

Act for carrying out such activities; 

(4) set forth the procedures that the allocation recipient will use to allocate 

grant and loan amounts and monitor for compliance with the requirements of 

section 8; 


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(5) provide that grant and loan amounts provided under this Act for the allocation recipient will be used only for eligible housing stimulus activities under 

section 8 that are eligible under such section for assistance with grant or loan 

amounts, as applicable; 

(6) contain such assurances as the Secretary shall require that the housing 

stimulus activities to be carried out with assistance under this Act shall not result in a significant net loss in rental housing in an area in which such activities are undertaken; 

(7) give priority emphasis and consideration to metropolitan areas, metropolitan cities, urban areas, rural areas, low- and moderate-income areas, census 

tracts and other areas having the greatest need, including those—

(A) with the greatest percentage of home foreclosures; 

(B) with the highest percentage of homes financed by subprime mortgage 

loans over 90 days delinquent; or 

(C) identified by the State, qualified metropolitan city, or unit of general 

local government as likely to face a significant rise in the rate of home foreclosures. 

(8) provide preference for activities that serve the lowest income families, who 

otherwise meet the income requirements under section 8, for the longest period 

and homeowners, who otherwise meet such income requirements, whose mortgages have been foreclosed; 

(9) provide preference for use of grant and loan amounts in connection with 

acquisition of qualified foreclosed properties that are acquired no earlier than 

60 days after the owner of the property described in section 13(7)(B) acquired 

such ownership; 

(10) describe any other preferences the allocation recipient may establish, 

such as housing for first responders, for veterans, for nurses serving underserved areas or homeless persons, or for homeless persons in accordance with 

the 10-year plan of the State to end homelessness, or providing housing for public school teachers or workforce who are employed by the city or locality in 

which the housing is located; 

(11) provide for obligation and outlay of grant amounts, and for loan commitments and disbursement, in accordance with the requirements under section 10; 

and 

(12) in the case of any grant or loan amounts that will be invested with the 

possibility of a return on investment, provide for use of any return on such investment only for one or more eligible housing stimulus activities under section 

8. 

(c) SUBMISSION.—

(1) IN GENERAL.—The Secretary shall provide for allocation recipients to submit plans under this section to the Secretary and shall establish requirements 

for the contents and form of such plans. Except in the case of plan resubmitted 

pursuant to subsection (d)(3), the Secretary may not accept or consider a plan 

unless the plan is submitted to the Secretary before the expiration of the 30- 

day period beginning upon the date of the enactment of this Act. 

(2) PUBLIC APPROVAL.—An allocation recipient may not submit a plan to the 

Secretary unless the plan is approved by the chief executive officer of the allocation recipient after a public hearing on the plan held pursuant to reasonable 

public notice. 

(d) REVIEW AND APPROVAL.—

(1) TIMING.—The Secretary shall review, and approve or disapprove, each 

plan submitted or resubmitted pursuant to paragraph (3) in compliance with 

the requirements established under this section before the expiration of the 30- 

day period beginning upon the submission of the plan. If the Secretary does not 

approve or disapprove a plan that is submitted or resubmitted in accordance 

with the requirements under this section before the expiration of such 30-day 

period and notify the allocation recipient of such approval or disapproval, the 

plan shall be considered approved for purposes of this section. 

(2) STANDARD FOR DISAPPROVAL.—The Secretary may disapprove a plan only 

if the plan fails to comply with the requirements of this Act. 

(3) RESUBMISSION.—If the Secretary disapproves the plan of an allocation recipient, the Secretary shall submit to the allocation recipient the reasons for the 

disapproval, and the allocation recipient may, during the 15-day period that begins upon notification of such disapproval and the reasons for such disapproval, 

submit to the Secretary a revised plan for review and approval in accordance 

with this subsection. 


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SEC. 5. ALLOCATION OF AMOUNTS. 

(a) GRANTS.—From the total amount made available under section 14(a) for grants 

under this Act, the Secretary shall make a grant to each qualified State in the grant 

amount determined under subsection (c) of this section for the qualified State. 

(b) LOANS.—From the aggregate amount of authority for the outstanding principal 

balance of loans made under this Act pursuant to section 14(b)(1), the Secretary 

shall allocate such authority for loans under this Act for each qualified State in the 

loan authority amount determined under subsection (c) of this section for the qualified State. 

(c) GRANT AMOUNTS AND LOAN AUTHORITY AMOUNTS.— (1) IN GENERAL.—The grant amount or loan authority amount for a qualified 

State shall be the foreclosure grant share or foreclosure loan share, respectively, 

for the State determined under subsection (d), as such share is adjusted in accordance with an index established or selected by the Secretary to account for 

differences between qualified States in the median price of single family housing in such States. 

(2) LIMITATION ON ADJUSTMENT.— If such adjustment would result in a grant 

amount or loan authority amount for any State that exceeds 125 percent of the 

foreclosure grant share or foreclosure loan share, respectively, for the State, the 

grant amount or loan authority amount for the State shall be 125 percent of 

foreclosure grant share or foreclosure loan share, respectively, for the State and 

the Secretary shall increase the grant amounts or loan authority amounts for 

all other States on a pro rata basis, except as provided in paragraph (3), by the 

amount necessary to account for the aggregate of any such decreases in grant 

amounts or loan authority amounts for States to comply with the 125 percent 

limitation. 

(3) LIMITATION ON REALLOCATION.—No increase in the grant amount or loan 

authority amount for any State from amounts reallocated pursuant to paragraph (2) shall result in the grant amount or loan authority amount for any 

State exceeding 125 percent of the foreclosure grant share or foreclosure loan 

share for the State, respectively. 

(4) PRIORITY PREFERENCE FOR UNUSED AMOUNTS.—States which have their 

grant or loan amounts reduced under paragraph (2) shall be granted a priority 

preference for any loans or grants which may be reallocated under subsection 

(i) (relating to reallocation of funds). 

(d) FORECLOSURE SHARES.—For purposes of this section: 

(1) GRANT SHARE.—The foreclosure grant share for a qualified State shall be 

the amount that bears the same ratio to the total amount made available under 

section 14(a) as the number of foreclosures on mortgages for single family housing and subprime mortgage loans for single family housing that are over 90 

days delinquent, occurring in such State during the most recently completed 

four calendar quarters for which such information is available, as determined 

by the Secretary, bears to the aggregate number of such foreclosures and such 

delinquent subprime mortgage loans occurring in all qualified States during 

such calendar quarters. 

(2) LOAN SHARE.—The foreclosure loan share for a qualified State shall be the 

amount that bears the same ratio to the aggregate amount of the principal balance of loans that may be outstanding at any time under this Act pursuant to 

section 14(b)(1) as the number of foreclosures on mortgages for single family 

housing and subprime mortgage loans for single family housing that are over 

90 days delinquent, occurring in such State during the most recently completed 

four calendar quarters for which such information is available, as determined 

by the Secretary, bears to the aggregate number of such foreclosures and such 

delinquent subprime mortgage loans occurring in all qualified States during 

such calendar quarters. 

(e) DISTRIBUTION OF FULL AMOUNT.—The Secretary shall establish the index referred to in subsection (c) and the grant and loan authority amounts for the qualified States in a manner that provides that—

(1) the aggregate of the grant amounts for all qualified States is equal to the 

total amount made available under section 14(a); and 

(2) the aggregate of the loan authority amounts for all qualified States is 

equal to the aggregate amount of authority for the outstanding principal balance of all loans made under this Act pursuant to section 14(b)(1). 

(f) REQUIREMENT TO ALLOCATE TO QUALIFIED METROPOLITAN CITIES.—Of any 

grant amounts and loan authority amounts allocated pursuant to this section for a 

State, such State shall allocate for each qualified metropolitan city located in such 

State a portion of such grant amounts and such loan authority amounts that bears 

the same ratio to such grant amounts and loan authority amounts, respectively, allocated for the State as the number of foreclosures on mortgages for single family 


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housing and subprime mortgage loans for single family housing that are over 90 

days delinquent, occurring in such qualified metropolitan city during the most recently completed four calendar quarters for which such information is available, as 

determined by the Secretary, bears to the aggregate number of such foreclosures 

and such delinquent subprime mortgage loans occurring in the State during such 

calendar quarters. A State may adjust such allocation to account for differences between median single family housing prices in the State and in qualified metropolitan cities in the State. 

(g) REQUIREMENT TO ALLOCATE TO QUALIFIED URBAN COUNTIES.—Of any grant 

amounts and loan authority amounts allocated pursuant to this section for a State, 

such State shall allocate for each qualified urban county located in such State a portion of such grant amounts and such loan authority amounts that bears the same 

ratio to such grant amounts and loan authority amounts, respectively, allocated for 

the State as the number of foreclosures on mortgages for single family housing and 

subprime mortgage loans for single family housing that are over 90 days delinquent, 

occurring in such qualified urban county during the most recently completed four 

calendar quarters for which such information is available, as determined by the Secretary, bears to the aggregate number of such foreclosures and such delinquent 

subprime mortgage loans occurring in the State during such calendar quarters. A 

State may adjust such allocation to account for differences between median single 

family housing prices in the State and in qualified urban counties in the State. 

(h) ALLOCATION EXCEPTION.—If the aggregate grant and loan authority amount 

to be allocated pursuant to subsection (f) or (g) to a qualified metropolitan city or 

qualified urban county is less than $10,000,000, a State may, but is not required 

to, allocate such grant and loan authority amount to such qualified metropolitan city 

or qualified urban county, and the allocation for such State shall be increased by 

the grant and loan authority amount not allocated to such qualified metropolitan 

city or qualified urban county. 

(i) REALLOCATION OF UNUSED AMOUNTS.—The Secretary shall recapture any grant 

amounts and loan authority amounts allocated to a State that are not used in a 

timely fashion in accordance with section 10, as the Secretary shall prescribe, and 

shall reallocate such amounts among all other qualified States in accordance with 

the provisions of this Act for allocation of grant amounts and loan authority 

amounts. 

SEC. 6. LOANS. 

(a) REQUIREMENT OF LOAN AUTHORITY AMOUNT.—The Secretary may make a loan 

under this Act for use in the area of an allocation recipient only to the extent and 

in such amounts that loan authority amounts for such allocation recipient are available. 

(b) REVOLVING AVAILABILITY OF LOAN AUTHORITY AMOUNT.—The loan authority 

amount allocated for each allocation recipient shall—

(1) upon the Secretary entering into a binding commitment to make a loan 

under this Act for use in the area of such allocation recipient, be decreased by 

the amount of the principal obligation of such loan; and 

(2) upon the repayment to the Secretary by any borrower of any principal 

amounts borrowed under a loan this Act for use in the area of such allocation 

recipient, be increased by the amount of principal repaid. 

(c) ASSISTED ENTITIES.—The loan authority amount of an allocation recipient may 

be used for activities described in section 8(a) undertaken by—

(1) the allocation recipient; 

(2) a unit of local government or a local governmental entity; or 

(3) any other entity, as provided in the approved plan of the allocation recipient under section 4. 

(d) LOAN TERMS.—Each loan provided under this Act from the loan authority 

amount of an allocation recipient shall—

(1) bear no interest; 

(2) have a term to maturity of—

(A) 3 years, in the case of any loan made to purchase or finance the purchase of qualified foreclosed housing for use under section 8(a)(1) for homeownership; and 

(B) 5 years, in the case of any loan made to purchase or finance the purchase of qualified foreclosed housing for use under section 8(a)(2) for rental; 

(3) not provide for amortization of the principal obligation of the loan during 

such term; 

(4) be non-recourse; 

(5) require payment of the original principal obligation under the loan only 

upon the expiration of the term of the loan; and 

(6) have such other terms and conditions as the Secretary may provide. 


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(e) PROCEDURE.—A qualified State or, upon its election, a qualified metropolitan 

city or qualified urban county shall— (1) enter into a loan agreement on behalf of the Secretary on terms established under this Act and any other terms such State, qualified metropolitan 

city, or qualified urban county determines appropriate; 

(2) disburse the loan amount in accordance with such terms, subject only to 

the absence of sufficient loan authority amount for such State, such qualified 

metropolitan city, or such qualified urban county; 

(3) monitor such loans; and 

(4) collect and transmit to the Secretary any loan repayments. 

(f) ELIGIBILITY FOR REPEAT LENDING.—A loan under this Act may be made to an 

entity that has previously borrowed amounts under a loan under this Act only if 

such entity has repaid 90 percent or more of the amounts due under all previous 

such loans. The Secretary may waive such requirement upon a request by an allocation recipient if the borrower has demonstrated satisfactory progress in utilizing 

outstanding loans and sufficient capacity to utilize additional loan amounts effectively. 

(g) SUNSET.—The Secretary may not enter into any commitment to make a loan 

under this Act, or make any such loan, after the expiration of the 48-month period 

beginning on the date of the enactment of this Act. 

SEC. 7. GRANTS. 

The grant amount of an allocation recipient may be used under section 8(b) by 

the allocation recipient, a unit of local government or a local governmental entity, 

or a nonprofit organization. 

SEC. 8. ELIGIBLE HOUSING STIMULUS ACTIVITIES. 

(a) LOAN AMOUNTS.—Amounts provided under a loan under this Act for an allocation recipient shall be used, in accordance with the approved plan of such allocation 

recipient, only for the following activities: 

(1) HOMEOWNERSHIP HOUSING PROVISION.—To purchase or finance the purchase of qualified foreclosed housing for resale as housing for homeownership 

to families having incomes that do not exceed 140 percent of the median income 

for the area in which the housing is located. 

(2) RENTAL HOUSING PROVISION.—To purchase or finance the purchase of 

qualified foreclosed housing for use as rental, lease-purchase, or rent-to-own 

housing, subject to the following requirements: 

(A) QUALIFIED TENANTS.—All dwelling units in the housing purchased or 

financed using any loan amounts shall be available for rental only by families whose incomes do not exceed 100 percent of the median income for the 

area in which the housing is located. 

(B) RENTS.—Rents for each dwelling unit in the housing purchased or financed using any loan amounts shall be established at amounts that do not 

exceed market rents for comparable dwelling units located in the area in 

which the housing is located and in accordance with such requirements as 

the Secretary shall establish to ensure that rents are established in a fair, 

objective, and arms-length manner. 

(3) HOUSING REHABILITATION.—To rehabilitate qualified foreclosed housing acquired with assistance provided pursuant to this subsection, to the extent necessary to comply with applicable laws, codes, and other requirements relating 

to housing safety, quality, and habitability, or to make improvements to the 

housing to increase the energy efficiency or conservation of the housing or provide a renewable energy source or sources for the housing, for the purpose of 

reselling the housing, to the extent possible, during the 3-month period that begins upon completion of rehabilitation and at a price that is as close as possible 

to the acquisition price of the housing. 

(b) GRANT AMOUNTS.—Grant amounts provided under this Act to an allocation recipient shall be used, in accordance with the approved plan of such allocation recipient, only for the following activities: 

(1) OPERATING AND HOLDING COSTS.—For costs of holding and operating qualified foreclosed housing acquired pursuant to subsection (a), including costs of 

management, taxes, handling, insurance, and other related costs. 

(2) COSTS RELATING TO PROPERTY ACQUISITION.—For incidental costs involved 

in acquiring qualified foreclosed housing pursuant to subsection (a), including 

reasonable closing costs, except that grant amounts may not be used to pay any 

portion of the purchase price for the housing under section 13(7)(C). 

(3) ADMINISTRATIVE COSTS.—For costs of the allocation recipient in administering loan authority amounts and grant amounts under this Act, except that 

the amount of grant amounts provided under this Act to an allocation recipient 

that may be used under this paragraph shall not exceed the amount equal to 


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8 percent of the sum of the grant amounts provided to the allocation recipient 

pursuant to subsection (a), (f), or (g) of section 5, as applicable, and the loan 

authority amount allocated to the allocation recipient pursuant to subsection 

(b), (f), or (g) of section 5, as applicable. 

(4) PLANNING COSTS.—For planning costs of the State in connection with this 

Act, except that the amount of grant amounts provided under this Act to an allocation recipient that may be used under this paragraph shall not exceed the 

amount equal to 2 percent of the sum of the grant amounts provided to the allocation recipient pursuant to subsection (a), (f), or (g) of section 5, as applicable, 

and the loan authority amount allocated to the State pursuant to subsection (b), 

(f), or (g) of section 5, as applicable. 

(5) HOUSING REHABILITATION.—For activities set forth in subsection (a)(3), except that an allocation recipient shall not use more than 20 percent of a grant 

amount allocation for such activities. 

(6) DEMOLITION.—For costs of demolishing qualified foreclosed housing that 

is deteriorated or unsafe, but amounts may be used under this paragraph only 

if the Secretary determines that the neighborhood or other area in which the 

housing is located has a high incidence of vacant and abandoned housing (or 

other vacant and abandoned structures) and is experiencing a significant decline in population. 

Notwithstanding any other provision of this subsection, grant amounts provided 

under this Act may not be used to provide assistance of any kind (including grants, 

loans, and closing cost financing) to provide amounts for downpayments for any 

homebuyers of single family housing. 

(c) PROHIBITED USES.—The Secretary shall, by regulation, set forth prohibited 

uses of grant or loan amounts under this Act, which shall include use for—

(1) political activities; 

(2) advocacy; 

(3) lobbying, whether directly or through other parties; 

(4) counseling services; 

(5) travel expenses; and 

(6) preparing or providing advice on tax returns. 

(d) INCOME TARGETING REQUIREMENT.—

(1) VERY LOW-INCOME FAMILIES.—Not less than 50 percent of the total grant 

amounts an allocation recipient makes available under this Act shall be used 

for activities under subsection (b) in connection with providing housing for families whose incomes do not exceed 50 percent of the median income for the area 

in which the housing is located. 

(2) EXTREMELY LOW-INCOME FAMILIES.—Not less than 50 percent of the total 

grant amounts an allocation recipient makes available under paragraph (1) 

shall be used for activities under subsection (b) in connection with providing 

housing for families whose incomes do not exceed 30 percent of the median income for the area in which the housing is located. 

(3) WAIVER.—

(A) IN GENERAL.—The Secretary may establish a percentage for purposes 

of paragraph (2) that is less than 50 percent if an allocation recipient certifies that, in addition to any other requirements the Secretary may establish—

(i) such allocation recipient has attempted to use all other federally 

related resources available to it in combination with the resources 

available under this Act to meet the requirements of paragraph (2); and 

(ii) the failure to comply with paragraph (2) will not result in an 

overall loss of housing affordable to families whose incomes do not exceed 30 percent of area median income in the area of such allocation 

recipient. 

(B) CONSIDERATION OF HOUSING NEEDS.—In establishing an alternative 

percentage for purposes of paragraph (2) for an allocation recipient that 

meets the certification requirements of subparagraph (A), the Secretary 

shall take into consideration the housing needs in the area of such allocation recipient of families whose incomes do not exceed 30 percent of area 

median income. 

(e) USE FOR RURAL AREAS.—An allocation recipient receiving any grant or loan 

amounts under this Act that includes any rural areas shall use a portion of its grant 

and loan authority amount for eligible activities located in rural areas that is proportionate to the identified need for such activities in such rural areas. 

(f) SECURITY.—A qualified State, or at its election, a qualified metropolitan city 

or qualified urban county, shall record a lien in the name of the Secretary on any 

qualified foreclosed housing purchased or financed with a loan under this section 


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in the amount of the principal obligation under the loan and interest due under the 

loan. 

(g) QUALIFIED HOMEOWNERS.—This Act may not be construed to prevent the resale of qualified foreclosed housing to a prior owner or occupant of such housing who 

meets the income requirements of this Act. 

(h) VOUCHER NONDISCRIMINATION.—

(1) PROSPECTIVE TENANTS.—A recipient of amounts from a loan or grant 

under this Act may not refuse to lease a dwelling unit in housing assisted with 

any such loan or grant amounts to a holder of a voucher or certificate of eligibility under section 8 of the United States Housing Act of 1937 (42 U.S.C. 

1437f) because of the status of the prospective tenant as such a holder. 

(2) CURRENT TENANTS.—In the case of any qualified foreclosed housing for 

which funds made available under the Act are used and in which a recipient 

of assistance under section 8(o) of the U.S. Housing Act of 1937 resides at the 

time of acquisition or financing, the owner and any successor in interest shall 

be subject to the lease and to the housing assistance payments contract for the 

occupied unit. Vacating the property prior to sale shall not constitute good 

cause for termination of the tenancy unless the property is unmarketable while 

occupied or unless the owner or subsequent purchaser desires the unit for personal or family use. This paragraph shall not preempt any State or local law 

that provides more protection for tenants. 

(i) EFFECT OF FORECLOSURE ON PREEXISTING LEASE.—

(1) IN GENERAL.—In the case of any foreclosure on any dwelling or residential 

real property acquired with any amounts made available under this Act, any 

successor in interest in such property pursuant to the foreclosure shall assume 

such interest subject to—

(A) the provision, by the successor in interest, of a notice to vacate to any 

bona fide tenant at least 90 days before the effective date of the notice to 

vacate; and 

(B) the rights of any bona fide tenant, as of the date of such notice of 

foreclosure—

(i) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of 

the lease or the end of the 6-month period beginning on the date of the 

notice of foreclosure, whichever occurs first, subject to the receipt by 

the tenant of the 90-day notice under subparagraph (A); or 

(ii) without a lease or with a lease terminable at will under State 

law, subject to the receipt by the tenant of the 90-day notice under subparagraph (A), except that nothing under this subparagraph shall affect the requirements for termination of any federally subsidized tenancy. 

(2) BONA FIDE LEASE OR TENANCY.—For purposes of this subsection, a lease 

or tenancy shall be considered bona fide only if—

(A) the mortgagor under the contract is not the tenant; 

(B) the lease or tenancy was the result of an arms-length transaction; or 

(C) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property. 

(j) PROHIBITION OF DEMOLITION OF PUBLIC HOUSING.—Notwithstanding any other 

provision of this Act, amounts from a grant or loan under this Act may not be used 

to demolish any public housing (as such term is defined in section 3 of the United 

States Housing Act of 1937 (42 U.S.C. 1437a)). 

SEC. 9. SHARED APPRECIATION AGREEMENT. 

Notwithstanding any other provision of this Act, no amounts from a loan or grant 

under this Act may be used under section 8 for any qualified foreclosed housing unless such binding agreements are entered into, in accordance with such requirements as the Secretary shall establish, that ensure that the Federal Government 

shall, upon any sale or disposition of the qualified foreclosed housing by the owner 

who acquires the housing pursuant to assistance under this Act, receive an amount 

equal to 20 percent of the difference between the net proceeds from such sale or disposition and the cost of such acquisition of the housing pursuant to assistance under 

this Act, after deductions for expenditures paid or incurred after the date of such 

acquisition that are properly chargeable to capital account (within the meaning of 

section 1016 of the Internal Revenue Code of 1986) with respect to such housing. 

In the case of a for-profit owner, this section shall be applied by substituting ‘‘50 

percent’’ for ‘‘20 percent’’. 


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SEC. 10. SPENDING REQUIREMENTS. 

(a) IN GENERAL.—Each allocation recipient that receives a grant under this Act 

or is allocated loan authority amounts under this Act pursuant to section 5(b) 

shall—

(1) commence obligation of such grant amounts and commitment of such loan 

authority amounts not later than the expiration of the 120-day period that begins upon approval of the approved plan of allocation recipient; 

(2) obligate all such grant amounts and enter into commitments for all such 

loan authority amounts not later than the expiration of the 180-day period beginning upon such approval; and 

(3) except as provided in subsection (b) of this section, outlay all such grant 

amounts and disburse all such loan authority amounts not later than the 24- 

month period that begins upon such approval. 

This subsection shall not apply to loan authority amounts of an allocation recipient 

attributable, pursuant to section 6(b)(2), to repayment of principal amounts of loans 

under this Act. 

(b) EXCEPTION TO SPENDING REQUIREMENT.—If an allocation recipient in good 

faith makes a request, in the plan submitted to the Secretary pursuant to section 

4 or otherwise after approval of such plan, for extension of the period referred to 

in paragraph (1), (2), or (3) of subsection (a) of this section, the Secretary may extend the period for not more than 5 months. 

SEC. 11. SERVICER CONTACT. 

The servicer of a federally related mortgage loan (as such term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) shall 

notify the unit of general local government in which the property securing the mortgage is located upon becoming responsible for a qualified foreclosed property and 

provide such unit of general local government with the name and 24-hour contact 

information of a representative authorized to negotiate purchases. 

SEC. 12. ACCOUNTABILITY. 

(a) REPORTING.—Each allocation recipient that receives a grant or allocation of 

loan authority amount under this Act shall submit a report to the Secretary, not 

later than the expiration of the 12-month period beginning upon the approval of the 

qualified plan by the Secretary, regarding use of such amounts which shall contain 

such information, including information about the location and type of assisted 

properties and the income of families purchasing or renting housing assisted under 

this Act, as the Secretary shall require. 

(b) MISUSE OF AMOUNTS.—If the Secretary determines that any amounts from a 

grant or loan under this Act for an allocation recipient or other recipient of grant 

or loans funds has been used in a manner that is in violation of this Act, any regulations issued under this Act, or any requirements or conditions under which such 

amounts were provided, the Secretary shall require the allocation recipient or other 

recipient of grant or loans funds to reimburse the Treasury of the United States in 

the amount of any such misused funds. 

(c) HOLD HARMLESS.—Notwithstanding subsection (b), a State shall not be required to reimburse the Treasury of the United States for any misused funds such 

State is required to allocate to a qualified metropolitan city or qualified urban county under subsection (f) or (g) of section 5, respectively. 

SEC. 13. DEFINITIONS. 

For purposes of this Act, the following definitions shall apply: 

(1) ALLOCATION RECIPIENT.—The term ‘‘allocation recipient’’ means—

(A) a qualified State; 

(B) a qualified metropolitan city; and 

(C) a qualified urban county. 

(2) ALLOCATION RECIPIENT ADMINISTRATOR.—The term ‘‘allocation recipient 

administrator’’ means the entity that is designated, pursuant to section 4(b)(1), 

in the approved plan of the allocation recipient to act for the allocation recipient 

for purposes of this Act. 

(3) APPROVED PLAN.—The term ‘‘approved plan’’ means a plan of an allocation 

recipient that has been approved pursuant to section 4. 

(4) COVERED MULTIFAMILY HOUSING.—The term ‘‘covered multifamily housing’’

means a residential structure that consists of 64 or fewer dwelling units. 

(5) LOAN AUTHORITY AMOUNT.—The term ‘‘loan authority amount’’ means, 

with respect to an allocation recipient, the amount of loan authority available 

pursuant to section 14(b)(1) that is allocated for the allocation recipient pursuant to subsection (b), (f), or (g) of section 5, as applicable, as such amount may 

be increased or decreased pursuant to section 6(b). 


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(6) NONPROFIT ORGANIZATION.—The term ‘‘nonprofit organization’’ has the 

meaning given such term in section 104 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12704). 

(7) QUALIFIED FORECLOSED HOUSING.—The term ‘‘qualified foreclosed housing’’

means housing that—

(A)(i) is single family housing that is not occupied by an owner, pursuant 

to foreclosure or assignment of the mortgage on the housing or forfeiture 

of the housing; or 

(ii) is covered multifamily housing; 

(B) is owned by a lender, mortgage company, investor, financial institution, or other such entity, or any government entity, pursuant to foreclosure 

or assignment of the mortgage on the housing or forfeiture of the housing; 

and 

(C) has a purchase price—

(i) in the case of single family housing, that does not exceed 110 percent of the average purchase price for single family housing in the area 

in which the housing is located, as determined by the Secretary. 

(ii) in the case of covered multifamily housing, that does not exceed 

the dollar amount limitation, for housing of the applicable size located 

in the area in which the housing is located, on the amount of a principal obligation of a mortgage eligible for insurance under section 207 

of the National Housing Act (12 U.S.C. 1713), as in effect on the date 

of the enactment of this Act pursuant to such section 207(c)(3)(A) and 

section 206A of such Act (12 U.S.C. 1712a). 

(8) QUALIFIED METROPOLITAN CITY.—The term ‘‘qualified metropolitan city’’

means an incorporated place, for which there is an improved plan, that—

(A) is among the 100 most populous incorporated places in the United 

States, as determined according to data from the most recent decennial census that is published before the date of the enactment of this Act; or 

(B)(i) has a minimum population of 50,000, as determined according to 

data from the most recent decennial census that is published before the 

date of the enactment of this Act; and 

(ii) has a foreclosure rate that exceeds 125 percent of the foreclosure rate 

for the entire State 

(9) QUALIFIED STATE.—The term ‘‘qualified State’’ means a State for which 

there is an approved plan. 

(10) QUALIFIED URBAN COUNTY.—The term ‘‘qualified urban county’’ means an 

urban county (as such term is defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5302)), for which there is an approved plan, that is among the 50 most populous urban counties in the United 

States, as determined—

(A) according to data from the most recent decennial census; and 

(B) excluding the population of any qualified metropolitan city within 

such urban county, unless such metropolitan city has agreed to have its 

population included with the population of the county for the purposes of 

this Act. 

(11) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of Housing and 

Urban Development. 

(12) SINGLE FAMILY HOUSING.—The term ‘‘single family housing’’ means a residential structure consisting of from one to four dwelling units. 

(13) STATE.—The term ‘‘State’’ means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 

Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, and 

other territory or possession of the United States. 

SEC. 14. FUNDING. 

(a) GRANTS.—There is authorized to be appropriated to the Secretary of the Treasury $7,500,000,000 for grants under this Act. 

(b) DIRECT LOANS.—

(1) LOAN COMMITMENT AUTHORITY LIMITATION.—Subject only to the availability of sufficient amounts for the costs (as such term is defined in section 502 

of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of such loans and the 

absence of qualified requests for loans, the Secretary shall enter into commitments to make loans under this Act, and shall make such loans, in an amount 

such that the aggregate outstanding principal balance of such loans does not 

at any time exceed $7,500,000,000. 

(2) AUTHORIZATION OF APPROPRIATIONS FOR COSTS.—There is authorized to be 

appropriated such sums as may be necessary for costs (as such term is defined 


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in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of loans 

under this Act. 

SEC. 15. REGULATIONS AND IMPLEMENTATION. 

(a) REGULATIONS.—The Secretary shall issue any regulations necessary to carry 

out this Act. 

(b) IMPLEMENTATION.—Pending the effectiveness of regulations issued pursuant to 

subsection (a), the Secretary shall take such action as may be necessary to implement this Act by notice, guidance, and interim rules. 

PURPOSE AND SUMMARY

H.R. 5818, the Neighborhood Stabilization Act of 2008, establishes a loan and grant program administered by the Department 

of Housing and Urban Development to help States purchase and 

rehabilitate owner-vacated, foreclosed homes. The goal of the bill is 

to stabilize and occupy these properties as soon as possible, either 

through resale or rental to qualified low- and moderate-income 

families. 

The bill, as reported, establishes a $15 billion HUD-administered program of which $7.5 billion of the funds would be for loans and 

the other $7.5 billion would be for grants. Each State’s loan and 

grant authority is based on the State’s percentage of nationwide 

foreclosures over the last four calendar quarters and the number 

of subprime loans delinquent over 90 days, adjusted to account for 

the State’s relative median home price, except that the median 

home price factor may increase any state’s share by no more than 

25 percent. In the event of a surplus, States at the limit will receive a preference for any excess funds. States then allocate funds 

to government entities or for profit and nonprofit organizations for 

the purchase, rehabilitation, and resale of homeownership housing 

and the purchase, rehabilitation, and operation of rental housing. 

States are required to direct funds to qualified metropolitan cities 

and urban counties within their bounds. The bill requires a State 

to use a portion of the loan and grant authority for eligible activities in rural areas proportionate to the identified need in those 

areas. 

Loans are non-recourse and zero-interest to finance acquisition 

and rehabilitation costs. The federal government would be paid 

back from resale or, in the case of rental properties, refinance proceeds. Loans for homeownership properties must be repaid within 

three years. For rental properties, the maximum loan term is five 

years. In addition, the federal government would receive a percentage of any appreciation a property owner realizes at resale. Grant 

funds may be used for property taxes and insurance during the 

pre-occupancy phase, operating costs such as property management 

fees, and State and grantee administrative and planning costs. 

Grants may also cover incidental costs involved in acquiring qualified foreclosed housing such as reasonable closing costs, and rehabilitation costs. 

Homes purchased for resale must be sold to families with incomes that do not exceed 140 percent of local area median income 

(AMI). Properties purchased for rental must serve families having 

incomes at or below local AMI. Allocation recipients are required 

to give a preference to activities serving the lowest income families 

for the longest period and homeowners whose mortgages have been 

foreclosed. Allocation recipients may establish preferences for otherwise income-eligible first responders, veterans, public school 


dwashington3 on PRODPC61 with HEARING
12 

teachers, workforce, and homeless persons. At least 50 percent of 

the grant money must be targeted to house families at or below 50 

percent of local AMI, and not less than half of this money must target families at or below 30 percent of local AMI. Under specified 

circumstances, HUD may establish an alternative percentage of 

less than 50 percent to serve extremely low-income families (those 

at or below 30 percent of local AMI.) The bill would also explicitly 

prohibit discrimination against voucher holders and provide eviction protections for tenants in foreclosed properties acquired with 

funds made available under the Act. 

BACKGROUND AND NEED FOR LEGISLATION

A record number of American families are facing or are at risk 

of foreclosure. According to data from the Mortgage Bankers Association (MBA), the delinquency rate for mortgage loans on singlefamily properties stood at 5.82 percent of all loans outstanding in 

the fourth quarter of 2007, up almost 20 percent from one year ago. 

This is the highest total delinquency rate in the MBA survey in 

over 20 years. Further, this delinquency data does not take into account loans in the foreclosure process. The percentage of loans in 

the foreclosure process has risen over 70 percent in the last year 

and stands at the highest level ever. As part of its response to the 

housing crisis, the Committee held a two-day legislative hearing 

entitled ‘‘Using FHA for Housing Stabilization and Homeownership 

Retention’’, on April 9 and 10, 2008, In testimony before the Committee at the April 9th hearing, Chairman Sheila Bair of the Federal Deposit Insurance Corporation (FDIC) also cited data from the 

MBA and observed that over 20 percent of subprime adjustable 

rate mortgages (ARMs) were seriously delinquent in the fourth 

quarter of 2007, and over 14 percent of all subprime mortgages 

were seriously delinquent. 

According to Mark Zandi of Economy.com, 550,000 first mortgage 

loans were in default as of the end of January 2008. This pace 

would leave 2.2 million defaults this year and could go as high as 

3 million. In addition, Mr. Zandi also notes nearly 8.8 million 

homeowners, or 10 percent of all homeowners, are ‘‘underwater.’’

Similarly, Governor Randall Kroszner of the Federal Reserve testified before the Committee on April 9, that more than 1.5 million 

foreclosures were started during 2007, up 53 percent from the previous year, and the consensus expectation is that the number of 

foreclosures in 2008 will likely exceed the number in 2007. 

Rising delinquency and foreclosure rates have reverberated in 

the secondary market, decreasing the value of mortgage backed securities and reducing the availability of credit. Accordingly, lenders 

have tightened credit standards, making it more difficult for delinquent borrowers to refinance. Chairman Bair noted the sharp contraction in credit availability in her April 9th testimony, stating 

that the total U.S. mortgage debt originated in the fourth quarter 

of 2007 was $450 billion, down 38 percent from the fourth quarter 

of 2006, and that the total issuance of subprime mortgage-backed 

securities fell by 89 percent in the fourth quarter of 2007 compared 

to the prior year. 

At the same time, because of falling home prices in many parts 

of the country, many borrowers—even those current on their mortgages—find themselves unable to refinance into more affordable or 


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13 

fixed-rate products because their outstanding mortgage loan balances exceed their homes’ values. These borrowers’ inability to refinance before a rate reset may be creating a downward cycle with 

increasing foreclosure rates, which in turn further lowers local 

property values, further eroding credit availability. In addition to 

lowering local home values and tax revenues due to declining assessed valuations, vacant foreclosed properties are a drain on local 

government resources. These properties attract crime, vandalism, 

and arson and contribute to the blight associated with abandoned 

properties. 

As mentioned above, on April 9 and 10, 2008, the Committee 

held a two-day hearing on ‘‘Using the FHA for Housing Stabilization and Homeownership Retention.’’ This hearing examined a discussion draft of the Housing Stabilization and Homeownership Retention Act distributed to the public on March 13, 2008. The second 

day of the hearings (April 10th) focused on Title III of the discussion draft, which became the basis for H.R. 5818. At the hearing, 

Maryland Governor Martin O’Malley testified that, ‘‘The proposed 

$[15] billion fund administered by states to acquire, rehabilitate, 

and sell foreclosed homes will provide a critical tool to curtail the 

negative impacts foreclosures have on our neighborhoods and communities.’’ In addition, Doug Garver of the Ohio Housing Finance 

Agency testified that the ‘‘legislation’s proposed state loan and 

grant program would significantly strengthen and expand state 

HFA [housing finance agency] initiatives.’’

The Committee heard testimony from Mayors Thomas Menino 

and Oscar Goodman expressing concern that the discussion draft of 

the bill distributed all funding to States, rather than enabling cities and other Community Development Block Grant-eligible entities administer the funds. In response, H.R. 5818 as introduced requires States to automatically allocate funds to any of the most 

populous 25 cities in the country that lie within their bounds. During mark-up, such direct allocations were expanded to include: (1) 

the 100 most populous cities; (2) the 50 most populous counties; 

and (3) any city with a population greater than 50,000 and a foreclosure rate 1.25 times the statewide average. 

The Committee also received testimony on the impact of the foreclosure crisis on low-income people. Doug Garver noted that that 

foreclosed properties are especially concentrated in lower-income 

neighborhoods, which were targeted by subprime lenders. Mr. 

Garver emphasized the need to have vacant properties quickly resold or put to some other productive use, otherwise they destabilize 

often already fragile communities by further depressing home values, discouraging investment, and contributing to vagrancy and 

crime. Sheila Crowley, testifying on behalf of the National Low Income Housing Coalition, presented testimony about the large percentage of housing counseling clients in crisis with incomes at or 

below 50 percent of the local area median income. The Committee 

also understands that the housing problems of low-income homeowners and renters due to foreclosures are increased by the well 

established problem of a shortage of affordable housing. Given both 

the immediate and long-standing housing crisis for low-income people, several witnesses at the April 10th hearing testified about the 

need to target foreclosed properties funds to low-income families. 


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14 

The Committee is also well aware that many middle-income families and communities are seriously affected by the current foreclosure crisis. Given this reality, the Committee received recommendations for adopting legislation that includes broader targeting than what usually applies to federal housing programs, particularly in the homeownership area. In addition to helping middleincome families, as Mr. Garver noted in his testimony, broader income targeting for the funds to rehabilitate foreclosed properties 

may also help to promote economic integration. 

The Committee received testimony on the need for protections for 

tenants when the owners of their homes lose their property to foreclosure. Although some states have enacted tenant protection laws 

that give these tenants a reasonable period of time to relocate, others have not. The forms of protection recommended included, 

among other things, providing tenants in the foreclosed property 

with adequate notice if being required to vacate and requiring the 

new owner to honor the terms of the existing lease, in both single 

family and multi-family properties. 

HEARINGS

The Committee on Financial Services held a two-day hearing entitled ‘‘Using FHA for Housing Stabilization and Homeownership 

Retention’’ on April 9 and 10, 2008. The following witnesses testified on April 9th. 

Panel One 

The Honorable Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation 

The Honorable John C. Dugan, Comptroller, Office of the Comptroller of the Currency 

The Honorable John M. Reich, Director, Office of Thrift Supervision 

The Honorable Randall Kroszner, Board Member, Board of Governors of the Federal Reserve System 

The Honorable Brian Montgomery, Assistant Secretary for Housing—Federal Housing Commissioner, United States Department of 

Housing and Urban Development 

Panel Two 

Mr. Brian Wesbury, Chief Economist, First Trust Advisors L.P. 

Dr. Alan S. Blinder, Ph.D., Gordon S. Rentschler Memorial Professor of Economics and Public Affairs, Princeton University 

Dr. Allen Sinai, Chief Global Economist, Strategist and President, Decision Economics, Inc. 

The following witnesses testified on April 10th: 

Panel One 

The Honorable Martin O’Malley, Governor, State of Maryland 

The Honorable Adrian M. Fenty, Mayor, District of Columbia 

The Honorable Thomas M. Menino, Mayor, City of Boston, Massachusetts 

The Honorable Oscar B. Goodman, Mayor, City of Las Vegas, Nevada 


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Panel Two 

Mr. Doug Garver, Executive Director, Ohio Housing Finance 

Agency 

Mr. David C. Lizarraga, Chairman, US Hispanic Chamber of 

Commerce 

Ms. Sheila Crowley, President, National Low Income Housing 

Coalition 

Mr. Hilary O. Shelton, Director, NAACP Washington Bureau 

Mr. Victor Burrola, Director, Homeownership Network, National 

Council of La Raza 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

April 23, 2008, and ordered H.R. 5818, the ‘‘Neighborhood Stabilization Act of 2008’’, as amended, favorably reported by a record 

vote of 38 yeas and 26 nays. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. A motion by Mr. 

Frank to report the bill, as amended, to the House with a favorable 

recommendation was agreed to by a record vote of 38 yeas and 26 

nays (Record vote FC–90). The names of Members voting for and 

against follow: 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. X ........... .............. Mr. Bachus ........................... ........... X ..............

Mr. Kanjorski ......................... X ........... .............. Ms. Pryce (OH) ..................... X ........... ..............

Ms. Waters ............................ X ........... .............. Mr. Castle ............................ ........... X ..............

Mrs. Maloney ......................... X ........... .............. Mr. King (NY) ....................... ........... X ..............

Mr. Gutierrez ......................... ............ ........... .............. Mr. Royce ............................. ........... X ..............

Ms. Vela ́zquez ....................... ............ ........... .............. Mr. Lucas ............................. ........... X ..............

Mr. Watt ................................ X ........... .............. Mr. Paul ............................... ........... X ..............

Mr. Ackerman ........................ X ........... .............. Mr. LaTourette ...................... X ........... ..............

Mr. Sherman ......................... X ........... .............. Mr. Manzullo ........................ ........... X ..............

Mr. Meeks ............................. X ........... .............. Mr. Jones .............................. ........... X ..............

Mr. Moore (KS) ...................... X ........... .............. Mrs. Biggert ......................... ........... X ..............

Mr. Capuano ......................... X ........... .............. Mr. Shays ............................. X ........... ..............

Mr. Hinojosa .......................... X ........... .............. Mr. Miller (CA) ..................... ........... X ..............

Mr. Clay ................................ X ........... .............. Mrs. Capito .......................... ........... X ..............

Mrs. McCarthy ....................... X ........... .............. Mr. Feeney ............................ ........... ........... ..............

Mr. Baca ............................... X ........... .............. Mr. Hensarling ..................... ........... X ..............

Mr. Lynch .............................. X ........... .............. Mr. Garrett (NJ) .................... ........... X ..............

Mr. Miller (NC) ...................... X ........... .............. Ms. Brown-Waite .................. ........... ........... ..............

Mr. Scott ............................... X ........... .............. Mr. Barrett (SC) ................... ........... X ..............

Mr. Green .............................. X ........... .............. Mr. Gerlach .......................... ........... X ..............

Mr. Cleaver ........................... X ........... .............. Mr. Pearce ............................ ........... X ..............

Ms. Bean ............................... X ........... .............. Mr. Neugebauer .................... ........... X ..............

Ms. Moore (WI) ...................... X ........... .............. Mr. Price (GA) ...................... ........... X ..............

Mr. Davis (TN) ...................... X ........... .............. Mr. Davis (KY) ...................... ........... X ..............

Mr. Hodes .............................. X ........... .............. Mr. McHenry ......................... ........... X ..............

Mr. Ellison ............................. X ........... .............. Mr. Campbell ....................... ........... ........... ..............

Mr. Klein ............................... X ........... .............. Mr. Putnam .......................... ........... ........... ..............

Mr. Mahoney (FL) .................. X ........... .............. Mrs. Bachmann .................... ........... X ..............

Mr. Wilson ............................. X ........... .............. Mr. Roskam .......................... ........... X ..............

Mr. Perlmutter ....................... X ........... .............. Mr. Marchant ....................... ........... X ..............

Mr. Murphy ............................ X ........... .............. Mr. McCotter ........................ ........... X ..............

Mr. Donnelly .......................... X ........... .............. Mr. McCarthy ........................ ........... X ..............

Mr. Wexler ............................. X ........... .............. Mr. Heller ............................. ........... X ..............

Mr. Marshall ......................... X ........... ..............


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Representative Aye Nay Present Representative Aye Nay Present 

Mr. Boren .............................. X ........... ..............

Mr. Foster .............................. X ........... ..............

Mr. Carson ............................ X ........... ..............

The following amendments were disposed of by record votes. The 

names of Members voting for and against follow: 

An amendment by Mr. Price, No. 7, requiring offsets, was NOT 

AGREED TO by a record vote of 26 yeas and 34 nays (FC–86): 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ............ X .............. Mr. Bachus ........................... X ........... ..............

Mr. Kanjorski ......................... ............ X .............. Ms. Pryce (OH) ..................... ........... ........... ..............

Ms. Waters ............................ ............ X .............. Mr. Castle ............................ X ........... ..............

Mrs. Maloney ......................... ............ X .............. Mr. King (NY) ....................... X ........... ..............

Mr. Gutierrez ......................... ............ X .............. Mr. Royce ............................. X ........... ..............

Ms. Vela ́zquez ....................... ............ ........... .............. Mr. Lucas ............................. X ........... ..............

Mr. Watt ................................ ............ X .............. Mr. Paul ............................... X ........... ..............

Mr. Ackerman ........................ ............ X .............. Mr. LaTourette ...................... ........... X ..............

Mr. Sherman ......................... ............ X .............. Mr. Manzullo ........................ X ........... ..............

Mr. Meeks ............................. ............ X .............. Mr. Jones .............................. X ........... ..............

Mr. Moore (KS) ...................... ............ .............. Mrs. Biggert ......................... X ........... ..............

Mr. Capuano ......................... ............ X .............. Mr. Shays ............................. X ........... ..............

Mr. Hinojosa .......................... ............ X .............. Mr. Miller (CA) ..................... X ........... ..............

Mr. Clay ................................ ............ X .............. Mrs. Capito .......................... X ........... ..............

Mrs. McCarthy ....................... ............ X .............. Mr. Feeney ............................ ........... ........... ..............

Mr. Baca ............................... ............ X .............. Mr. Hensarling ..................... X ........... ..............

Mr. Lynch .............................. ............ X .............. Mr. Garrett (NJ) .................... X ........... ..............

Mr. Miller (NC) ...................... ............ X .............. Ms. Brown-Waite .................. ........... ........... ..............

Mr. Scott ............................... ............ X .............. Mr. Barrett (SC) ................... X ........... ..............

Mr. Green .............................. ............ X .............. Mr. Gerlach .......................... X ........... ..............

Mr. Cleaver ........................... ............ X .............. Mr. Pearce ............................ X ........... ..............

Ms. Bean ............................... ............ X .............. Mr. Neugebauer .................... X ........... ..............

Ms. Moore (WI) ...................... ............ X .............. Mr. Price (GA) ...................... X ........... ..............

Mr. Davis (TN) ...................... ............ ........... .............. Mr. Davis (KY) ...................... X ........... ..............

Mr. Hodes .............................. ............ X .............. Mr. McHenry ......................... X ........... ..............

Mr. Ellison ............................. ............ ........... .............. Mr. Campbell ....................... ........... ........... ..............

Mr. Klein ............................... ............ X .............. Mr. Putnam .......................... ........... ........... ..............

Mr. Mahoney (FL) .................. ............ X .............. Mrs. Bachmann .................... X ........... ..............

Mr. Wilson ............................. ............ X .............. Mr. Roskam .......................... ........... ........... ..............

Mr. Perlmutter ....................... ............ X .............. Mr. Marchant ....................... X ........... ..............

Mr. Murphy ............................ ............ X .............. Mr. McCotter ........................ X ........... ..............

Mr. Donnelly .......................... ............ X .............. Mr. McCarthy ........................ X ........... ..............

Mr. Wexler ............................. ............ X .............. Mr. Heller ............................. X ........... ..............

Mr. Marshall ......................... ............ X ..............

Mr. Boren .............................. ............ X ..............

Mr. Foster .............................. ............ X ..............

Mr. Carson ............................ ............ X ..............

An amendment by Mr. Hensarling, No. 8, regarding loans only 

at the same cost, was NOT AGREED TO by a record vote of 25 

yeas and 37 nays (FC–87). 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ............ X .............. Mr. Bachus ........................... X ........... ..............

Mr. Kanjorski ......................... ............ X .............. Ms. Pryce (OH) ..................... ........... X ..............

Ms. Waters ............................ ............ X .............. Mr. Castle ............................ ........... X ..............

Mrs. Maloney ......................... ............ X .............. Mr. King (NY) ....................... X ........... ..............

Mr. Gutierrez ......................... ............ X .............. Mr. Royce ............................. X ........... ..............

Ms. Vela ́zquez ....................... ............ ........... .............. Mr. Lucas ............................. X ........... ..............

Mr. Watt ................................ ............ X .............. Mr. Paul ............................... X ........... ..............

Mr. Ackerman ........................ ............ X .............. Mr. LaTourette ...................... ........... X ..............

Mr. Sherman ......................... ............ X .............. Mr. Manzullo ........................ X ........... ..............

Mr. Meeks ............................. ............ X .............. Mr. Jones .............................. X ........... ..............

Mr. Moore (KS) ...................... ............ X .............. Mrs. Biggert ......................... X ........... ..............


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Representative Aye Nay Present Representative Aye Nay Present 

Mr. Capuano ......................... ............ X .............. Mr. Shays ............................. X ........... ..............

Mr. Hinojosa .......................... ............ X .............. Mr. Miller (CA) ..................... X ........... ..............

Mr. Clay ................................ ............ X .............. Mrs. Capito .......................... X ........... ..............

Mrs. McCarthy ....................... ............ X .............. Mr. Feeney ............................ ........... ........... ..............

Mr. Baca ............................... ............ X .............. Mr. Hensarling ..................... X ........... ..............

Mr. Lynch .............................. ............ X .............. Mr. Garrett (NJ) .................... X ........... ..............

Mr. Miller (NC) ...................... ............ X .............. Ms. Brown-Waite .................. ........... ........... ..............

Mr. Scott ............................... ............ X .............. Mr. Barrett (SC) ................... X ........... ..............

Mr. Green .............................. ............ X .............. Mr. Gerlach .......................... X ........... ..............

Mr. Cleaver ........................... ............ X .............. Mr. Pearce ............................ X ........... ..............

Ms. Bean ............................... ............ X .............. Mr. Neugebauer .................... X ........... ..............

Ms. Moore (WI) ...................... ............ X .............. Mr. Price (GA) ...................... X ........... ..............

Mr. Davis (TN) ...................... ............ ........... .............. Mr. Davis (KY) ...................... X ........... ..............

Mr. Hodes .............................. ............ X .............. Mr. McHenry ......................... X ........... ..............

Mr. Ellison ............................. ............ ........... .............. Mr. Campbell ....................... ........... ........... ..............

Mr. Klein ............................... ............ X .............. Mr. Putnam .......................... ........... ........... ..............

Mr. Mahoney (FL) .................. ............ X .............. Mrs. Bachmann .................... X ........... ..............

Mr. Wilson ............................. ............ X .............. Mr. Roskam .......................... ........... ........... ..............

Mr. Perlmutter ....................... ............ X .............. Mr. Marchant ....................... X ........... ..............

Mr. Murphy ............................ ............ X .............. Mr. McCotter ........................ X ........... ..............

Mr. Donnelly .......................... ............ X .............. Mr. McCarthy ........................ X ........... ..............

Mr. Wexler ............................. ............ X .............. Mr. Heller ............................. X ........... ..............

Mr. Marshall ......................... ............ X ..............

Mr. Boren .............................. ............ X ..............

Mr. Foster .............................. ............ X ..............

Mr. Carson ............................ ............ X ..............

An amendment by Mr. Hensarling, No. 9, requiring matching 

State funds for grants, was NOT AGREED TO by a record vote of 

28 yeas and 36 nays (FC–88). 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ............ X .............. Mr. Bachus ........................... X ........... ..............

Mr. Kanjorski ......................... ............ X .............. Ms. Pryce (OH) ..................... X ........... ..............

Ms. Waters ............................ ............ X .............. Mr. Castle ............................ X ........... ..............

Mrs. Maloney ......................... ............ X .............. Mr. King (NY) ....................... X ........... ..............

Mr. Gutierrez ......................... ............ X .............. Mr. Royce ............................. X ........... ..............

Ms. Vela ́zquez ....................... ............ ........... .............. Mr. Lucas ............................. X ........... ..............

Mr. Watt ................................ ............ X .............. Mr. Paul ............................... X ........... ..............

Mr. Ackerman ........................ ............ X .............. Mr. LaTourette ...................... ........... X ..............

Mr. Sherman ......................... ............ X .............. Mr. Manzullo ........................ X ........... ..............

Mr. Meeks ............................. ............ X .............. Mr. Jones .............................. X ........... ..............

Mr. Moore (KS) ...................... ............ X .............. Mrs. Biggert ......................... X ........... ..............

Mr. Capuano ......................... ............ X .............. Mr. Shays ............................. X ........... ..............

Mr. Hinojosa .......................... ............ X .............. Mr. Miller (CA) ..................... X ........... ..............

Mr. Clay ................................ ............ X .............. Mrs. Capito .......................... X ........... ..............

Mrs. McCarthy ....................... ............ X .............. Mr. Feeney ............................ ........... ........... ..............

Mr. Baca ............................... ............ X .............. Mr. Hensarling ..................... X ........... ..............

Mr. Lynch .............................. ............ X .............. Mr. Garrett (NJ) .................... X ........... ..............

Mr. Miller (NC) ...................... ............ X .............. Ms. Brown-Waite .................. ........... ........... ..............

Mr. Scott ............................... ............ X .............. Mr. Barrett (SC) ................... X ........... ..............

Mr. Green .............................. ............ X .............. Mr. Gerlach .......................... X ........... ..............

Mr. Cleaver ........................... ............ X .............. Mr. Pearce ............................ X ........... ..............

Ms. Bean ............................... ............ X .............. Mr. Neugebauer .................... X ........... ..............

Ms. Moore (WI) ...................... ............ X .............. Mr. Price (GA) ...................... X ........... ..............

Mr. Davis (TN) ...................... ............ X .............. Mr. Davis (KY) ...................... X ........... ..............

Mr. Hodes .............................. ............ X .............. Mr. McHenry ......................... X ........... ..............

Mr. Ellison ............................. ............ ........... .............. Mr. Campbell ....................... ........... ........... ..............

Mr. Klein ............................... ............ X .............. Mr. Putnam .......................... ........... ........... ..............

Mr. Mahoney (FL) .................. ............ X .............. Mrs. Bachmann .................... X ........... ..............

Mr. Wilson ............................. ............ X .............. Mr. Roskam .......................... X ........... ..............

Mr. Perlmutter ....................... ............ X .............. Mr. Marchant ....................... X ........... ..............

Mr. Murphy ............................ ............ X .............. Mr. McCotter ........................ X ........... ..............

Mr. Donnelly .......................... ............ X .............. Mr. McCarthy ........................ X ........... ..............

Mr. Wexler ............................. ............ X .............. Mr. Heller ............................. X ........... ..............

Mr. Marshall ......................... ............ X ..............


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Representative Aye Nay Present Representative Aye Nay Present 

Mr. Boren .............................. ............ X ..............

Mr. Foster .............................. ............ X ..............

Mr. Carson ............................ ............ X ..............

An amendment by Mr. McHenry, No. 13, requiring qualified foreclosed housing be resold at public auction, was NOT AGREED TO 

by a record vote of 24 yeas and 40 nays (FC–89). 

Representative Aye Nay Present Representative Aye Nay Present 

Mr. Frank .............................. ............ X .............. Mr. Bachus ........................... X ........... ..............

Mr. Kanjorski ......................... ............ X .............. Ms. Pryce (OH) ..................... X ........... ..............

Ms. Waters ............................ ............ X .............. Mr. Castle ............................ ........... X ..............

Mrs. Maloney ......................... ............ X .............. Mr. King (NY) ....................... X ........... ..............

Mr. Gutierrez ......................... ............ X .............. Mr. Royce ............................. X ........... ..............

Ms. Vela ́zquez ....................... ............ ........... .............. Mr. Lucas ............................. X ........... ..............

Mr. Watt ................................ ............ X .............. Mr. Paul ............................... X ........... ..............

Mr. Ackerman ........................ ............ X .............. Mr. LaTourette ...................... ........... X ..............

Mr. Sherman ......................... ............ X .............. Mr. Manzullo ........................ X ........... ..............

Mr. Meeks ............................. ............ X .............. Mr. Jones .............................. X ........... ..............

Mr. Moore (KS) ...................... ............ X .............. Mrs. Biggert ......................... X ........... ..............

Mr. Capuano ......................... ............ X .............. Mr. Shays ............................. ........... X ..............

Mr. Hinojosa .......................... ............ X .............. Mr. Miller (CA) ..................... X ........... ..............

Mr. Clay ................................ ............ X .............. Mrs. Capito .......................... X ........... ..............

Mrs. McCarthy ....................... ............ X .............. Mr. Feeney ............................ ........... ........... ..............

Mr. Baca ............................... ............ X .............. Mr. Hensarling ..................... X ........... ..............

Mr. Lynch .............................. ............ X .............. Mr. Garrett (NJ) .................... X ........... ..............

Mr. Miller (NC) ...................... ............ X .............. Ms. Brown-Waite) ................. ........... ........... ..............

Mr. Scott ............................... ............ X .............. Mr. Barrett (SC) ................... ........... ........... ..............

Mr. Green .............................. ............ X .............. Mr. Gerlach .......................... ........... X ..............

Mr. Cleaver ........................... ............ X .............. Mr. Pearce ............................ X ........... ..............

Ms. Bean ............................... ............ X .............. Mr. Neugebauer .................... X ........... ..............

Ms. Moore (WI) ...................... ............ X .............. Mr. Price (GA) ...................... X ........... ..............

Mr. Davis (TN) ...................... ............ X .............. Mr. Davis (KY) ...................... X ........... ..............

Mr. Hodes .............................. ............ X .............. Mr. McHenry ......................... X ........... ..............

Mr. Ellison ............................. ............ X .............. Mr. Campbell ....................... ........... ........... ..............

Mr. Klein ............................... ............ X .............. Mr. Putnam .......................... ........... ........... ..............

Mr. Mahoney (FL) .................. ............ X .............. Mrs. Bachmann .................... X ........... ..............

Mr. Wilson ............................. ............ X .............. Mr. Roskam .......................... X ........... ..............

Mr. Perlmutter ....................... ............ X .............. Mr. Marchant ....................... X ........... ..............

Mr. Murphy ............................ ............ X .............. Mr. McCotter ........................ X ........... ..............

Mr. Donnelly .......................... ............ X .............. Mr. McCarthy ........................ X ........... ..............

Mr. Wexler ............................. ............ X .............. Mr. Heller ............................. X ........... ..............

Mr. Marshall ......................... ............ X ..............

Mr. Boren .............................. ............ X ..............

Mr. Foster .............................. ............ X ..............

Mr. Carson ............................ ............ X ..............

During the consideration of the bill, the following amendments 

were also considered: 

An amendment by Ms. Waters and Mr. Frank, No. 1, making 

technical and substantive changes, was AGREED TO by voice vote. 

An amendment by Mr. Miller of North Carolina, No. 2, regarding 

qualified metropolitan cities, was AGREED TO by voice vote. 

An amendment by Mr. Perlmutter, No. 3, regarding energy efficiency improvements, was AGREED TO by voice vote. 

An amendment by Mr. Capuano, Mrs. McCarthy of New York, 

and Mr. Carson, No. 4, instituting preferences for housing, was 

AGREED TO by a voice vote. 

An amendment by Mr. Wilson, No. 5, dealing with demolition 

costs and prohibition of demolition of public housing with funds or 

grants, was AGREED TO, as amended, by voice vote. 


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An amendment by Mr. Price, No. 5a, to amendment No. 5, was 

divided: the first portion was AGREED TO by voice vote and the 

second portion was WITHDRAWN. 

An amendment by Mr. Wilson, Mr. LaTourette, and Ms. Pryce, 

No. 6, establishing a formula for grant share or foreclosure loan 

share, was AGREED TO by voice vote. 

An amendment by Mr. Hensarling, No. 10, preventing the misuse 

of funds, was AGREED TO by voice vote. 

An amendment by Mr. Hensarling, No. 11, providing a monetary 

penalty for misuse of funds, was AGREED TO, as modified, by 

voice vote. 

An amendment by Mr. Hensarling, No. 12, prohibiting the use of 

grant amounts for downpayment assistance, was AGREED TO, by 

voice vote. 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee has held hearings and made 

findings that are reflected in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

H.R. 5818, the Neighborhood Stabilization Act of 2008, establishes a loan and grant program administered by HUD to help 

States purchase and rehabilitate owner-vacated, foreclosed homes. 

The goal of the bill is to stabilize and occupy these properties, as 

soon as possible, either through resale or rental to qualified lowand moderate-income families. As reported, H.R. 5818 establishes 

a $15 billion, HUD-administered loan and grant program; requires 

States to allocate funds to government entities or for profit and 

nonprofit organizations for the purchase, rehabilitation, and resale 

of homeownership housing and the purchase, rehabilitation, and 

operation of rental housing; requires homes purchased for resale 

must be sold to families with incomes that do not exceed 140 percent of local area median income (AMI); requires properties purchased for rental must serve families having incomes at or below 

local AMI; and prohibits discrimination against voucher holders 

and provides eviction protections for tenants in foreclosed properties assisted with funds made available under this Act. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 


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COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATE

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, May 1, 2008. 

Hon. BARNEY FRANK, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 5818, the Neighborhood 

Stabilization Act of 2008. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Daniel Hoople, who can 

be reached at 226–2860. 

Sincerely, 

PETER R. ORSZAG. 

Enclosure. 

H.R. 5818—Neighborhood Stabilization Act of 2008 

Summary: CBO estimates that implementing H.R. 5818 would cost about $8.4 billion over the 2009–2013 period, assuming appropriation of the authorized and necessary funds. 

H.R. 5818 would authorize the Secretary of the Department of 

Housing and Urban Development (HUD) to make zero-interest 

loans to qualified states, counties, and cities to purchase and rehabilitate certain foreclosed homes. Homes purchased under this authority would be sold or rented to families with incomes below a 

specified percentage of the region’s median income. Assuming appropriation of the necessary funds, CBO estimates that implementing this program would cost about $1 billion over the 2009–

2013 period for the loan subsidy and associated administrative 

costs. 

The legislation also would authorize the appropriation of $7.5 billion for the Secretaries of the Treasury and HUD to award grants 

to qualified states, counties, and cities to cover other costs related 

to purchasing and rehabilitating foreclosed homes under the direct 

loan program. Funds would be used to cover planning and administration, incidental costs of acquiring, operating, and holding foreclosed properties, and the costs of rehabilitating and demolishing 

properties. Based on historical spending data and information from 

local governments, CBO estimates that this provision would cost 

about $7.3 billion over the 2009–2013 period. Enacting this legislation would not affect direct spending or revenues. 

H.R. 5818 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA). 


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Estimated cost to the federal government: The estimated budgetary impact of H.R. 5818 is shown in the following table. The costs 

of this legislation fall within budget function 450 (community and 

regional development). 

By fiscal year, in millions of dollars—

2009 2010 2011 2012 2013 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Direct Loan Program: 

Subsidy Costs: 

Estimated Authorization Level ................................ 900 0 0 145 0 

Estimated Outlays ................................................... 505 360 35 80 60 

Administrative Costs: 

Estimated Authorization Level ................................ 15 7 7 8 8 

Estimated Outlays ................................................... 14 8 7 8 8 

Grant Program: 

Authorization Level ........................................................... 7,500 0 0 0 0 

Estimated Outlays ............................................................ 675 1,725 2,250 1,725 940 

Total Changes: 

Estimated Authorization Level ................................ 8,415 7 7 153 8 

Estimated Outlays ................................................... 1,194 2,093 2,292 1,813 1,008 

Basis of estimate: For this estimate, CBO assumes that the legislation will be enacted before the end of calendar year 2008 and that 

the amounts specified and estimated to be necessary will be appropriated in each year. 

H.R. 5818 would authorize the Secretaries of the Treasury and 

HUD to provide grants and direct loans to purchase and rehabilitate certain foreclosed homes. Eligible recipients would include 

states, urban counties, and metropolitan cities (including any city 

with a minimum population of 50,000 that has a foreclosure rate 

of more than 125 percent of the rate for the state in which it is 

located). Grant assistance also would be made available to nonprofit organizations. Funding from the grant and loan programs 

would be allocated to those entities based on the number of singlefamily homes that are in foreclosure or were financed with a subprime mortgage that has been delinquent for more than 90 days. 

Direct Loan Program 

H.R. 5818 would authorize the appropriation of such funds as 

may be necessary for the Secretary of HUD to make zero-interest 

loans to states, counties, and cities. Under the bill, the volume of 

outstanding loans would be capped at $7.5 billion and the authority 

to make new loans would expire four years after enactment. Loan 

proceeds would be used by state or local governments to purchase 

foreclosed homes. Those homes would be made available by those 

governments for sale to individuals with incomes below 140 percent 

of the area’s median income, or for rent to those with incomes 

below 100 percent of the area’s median income. Loan proceeds also 

could be used to rehabilitate homes to comply with applicable 

building codes and to increase energy efficiency. Federal loans used 

by state or local governments to purchase homes for resale or rent 

would have terms of three or five years, respectively. All loans 

made under the bill would be nonrecourse (the federal government 

could only seek recovery of the collateral in the event of a default), 


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bear no interest, and require principal payment only upon the expiration of the loan term. 

Based on the loan terms specified in the bill, CBO estimates that 

the subsidy cost for the first cohort of loans made under this legislation would total $900 million over the 2009–2013 period. That estimate includes a subsidy rate of about 12 percent (most of which 

is attributable to the fact that no interest would be charged on the 

loans) and assumes that most of the loan authority made available 

under the bill would be used. 

Under the bill, HUD also would be authorized to make new direct loans as the principal from the original cohort of loans is repaid. Because the authority to make new loans would expire after 

four years, new loan authority would be limited to repayments 

made on the initial cohort of loans prior to the expiration of the 

program. The Federal Credit Reform Act of 1990 requires that new 

loan obligations may only be made to the extent that new budget 

authority is provided. As such, CBO assumes that additional appropriations would be provided by the Congress to cover the cost of 

those new loans. CBO estimates that additional loans made under 

this revolving authority would require appropriations of about $145 

million in 2012, with outlays of $140 million over the 2012–2013 

period. 

Grant Program 

H.R. 5818 would authorize the appropriation of $7.5 billion for 

the Secretaries of the Treasury and HUD to make grants to states, 

counties, cities, and nonprofit organizations. Such funding would be 

used for planning and administration, incidental costs of acquiring 

foreclosed properties, costs of operating and holding those properties (including local property taxes and insurance), and rehabilitation and demolition costs. Based on historical spending patterns 

of community development and housing projects and information 

from several local governments, CBO estimates that implementing 

this provision would cost about $7.3 billion over the 2009–2013 period. 

Intergovernmental and private-sector impact: H.R. 5818 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA. The bill would benefit state and local governments by authorizing grants and loans for purchasing and redeveloping foreclosed properties. 

Estimate prepared by: Federal Costs: Daniel Hoople; Impact on 

State, Local, and Tribal Governments: Lisa Ramirez-Branum; Impact on the Private Sector: Keisuke Nakagawa. 

Estimate approved by: Theresa Gullo, Deputy Assistant Director 

for Budget Analysis. 

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 


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CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the general welfare of the 

United States) and clause 3 (relating to the power to regulate interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

EARMARK IDENTIFICATION

H.R. 5818 does not contain any congressional earmarks, limited 

tax benefits, or limited tariff benefits as defined in clause 9 of rule 

XXI. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Sec. 1. Short title and table of contents 

This Act may be cited as the ‘‘Neighborhood Stabilization Act of 

2008’’. The Table of Contents for this Act is as follows: Sec. 1. Short 

title and table of contents; Sec. 2. Congressional purposes; Sec. 3. 

Loans and grants to States; Sec. 4. Qualified plans; Sec. 5. Allocation of amounts; Sec. 6. Loans; Sec. 7. Grants; Sec. 8. Eligible housing stimulus activities; Sec. 9. Shared appreciation agreement; Sec. 

10. Spending requirements; Sec. 11. Servicer contact; Sec. 12. Accountability; Sec. 13. Definitions; Sec. 14. Funding; and Sec. 15. 

Regulations and implementation. 

Sec. 2. Congressional purposes 

The purposes of this Act are to establish a HUD-administered 

loan and grant program to help States, metropolitan cities, and 

urban counties purchase and rehabilitate owner-vacated, foreclosed 

homes with the goal of stabilizing and occupying them as soon as 

possible, either through resale or rental to qualified families; distribute these loans and grants to areas with the highest foreclosure 

and delinquent subprime mortgage levels; provide incentives for 

States, metropolitan cities, and urban counties to use the funds to 

stabilize as many properties as possible; and provide housing for 

low- and moderate-income families, especially those that have lost 

homes to foreclosure. 

Sec. 3. Loans and grants to states 

Provides that HUD will make loans and grants to States in accordance with their approved plans for eligible housing stimulus 

activities. 

Sec. 4. Qualified plans 

HUD may make a grant or allocate a loan amount to a State that 

has submitted an approved plan that: (1) designates an administrator; (2) describes the stimulus activities to be carried out with 


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the assistance; (3) prioritizes the allocation of funds to low- and 

moderate-income with high concentrations of foreclosures, describes 

how these activities will help stabilize such neighborhoods rapidly, 

and describes how the loan funds will be distributed to facilitate 

repayment; (4) describes the procedures the State will use to allocate loan and grant amounts and monitor compliance; (5) provides 

that assistance will only be used for eligible activities; (6) contains 

such assurances as HUD shall require that the activities carried 

out under this Act will not result in a significant net loss in rental 

housing in areas where such activities are undertaken; (7) gives 

priority emphasis and consideration to metropolitan areas, metropolitan cities, urban areas, rural areas, low- and moderate-income 

areas, census tracts, and other areas having the greatest need, including those with the greatest percentage of home foreclosures, 

the highest percentage of homes financed by subprime loans over 

90 days delinquent, or identified as likely to face a significant rise 

in the rate of home foreclosures; (8) provides preference to activities serving the lowest income families for the longest period and 

income-eligible homeowners whose mortgages have been foreclosed; 

(9) provides preference for use of grant and loan amounts in connection with the acquisition of foreclosed properties that are acquired no earlier than 60 days after the lender, mortgage company, 

investor, financial institution, or other such entity, or any government entity acquired ownership pursuant to foreclosure, assignment, or forfeiture; (10) describes any other preferences, such as 

housing for first responders, veterans, nurses serving underserved 

areas, homeless persons in accordance with the 10-year plan of the 

State to end homelessness, or public school teachers or workforce 

who are employed by the city or locality in which the housing is 

located; (11) provides for obligation and outlay of grant amounts 

and commitment and disbursement of loan amounts; and (12) provides for reinvestment of any returns on invested grant or loan 

amounts into eligible housing stimulus activities. 

Plans must be approved by the chief executive office of the allocation recipient after a public hearing and submitted to HUD within 30 days of bill enactment. HUD must approve or disapprove the 

plan within 30 days of receipt or it is deemed approved, and an allocation recipient may submit a revised plan within 30 days of receiving a disapproval notice. 

Sec. 5. Allocation of amounts 

For each qualified State, HUD must make grants and allocate 

loan authority pursuant to a specified formula. Under the formula, 

HUD is to make funds available in amounts that bear the same 

ratio to the national grant and loan authority as the number of 

foreclosures on mortgages of single-family housing and subprime 

mortgage loans for single-family housing that are over 90 days delinquent occurring in such State during the most recent four calendar quarters bears to the number of such foreclosures and delinquent subprime mortgage loans in all qualified States during such 

calendar quarters, adjusted by a HUD-established index to account 

for differences between States’ median home prices; except that the 

median home price factor may increase any State’s share by no 

more than 25 percent. In the event of a surplus, States at the limit 

will receive a preference for any excess funds. 


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Requires a State to allocate to a qualified metropolitan city or 

qualified urban county within its bounds for which there is an approved plan grants and loan authority in an amount that bears the 

same ratio to the State grant and loan authority as the number of 

foreclosures on mortgages of single-family housing and subprime 

mortgage loans for single-family housing that are over 90 days delinquent occurring in such State during the most recent four calendar quarters bears to the number of such foreclosures and delinquent subprime mortgage loans in all qualified States during such 

calendar quarters. A State may adjust grant and loan allocations 

to a qualified metropolitan city or qualified urban county to account for differences between median single-family housing prices 

in the State and in the metropolitan city or urban county. However, if the combined allocation of the grant and loan authority 

amount to a qualified metropolitan city or qualified urban county 

would be less than $10 million, a State may, but is not required 

to, allocate such grant and loan authority amount to such metropolitan city or urban county, and the allocation for such State is 

increased by the grant and loan authority amount not allocated to 

the metropolitan city or urban county. 

HUD shall recapture any grant or loan authority amounts allocated to a State that are not used in a timely fashion. HUD shall 

reallocate such recaptured amounts among all qualified States in 

accordance with the allocation provisions of this Act. 

Sec. 6. Loans 

Requires that each allocation recipient’s loan authority amount 

shall be decreased by the principal obligation of the loan upon entering into a binding commitment for use within the allocation recipient’s area. Upon loan repayment to HUD, an allocation recipient’s loan authority will increase by the amount of loan principal 

repaid. An allocation recipient may enter into a loan agreement on 

behalf of HUD with the State, a unit of local government or local 

governmental entity, or any other entity as provided in the approved plan. Loans are non-recourse and non-amortizing, bear no 

interest, have a term of maturity of three years for homeownership 

housing and five years for rental housing, and require payment of 

original principal only at the end of the loan term. An allocation 

recipient shall disburse loan amounts, monitor such loans, and collect and transmit to HUD loan repayments. 

A loan may be made to an entity that previously borrowed loan 

amounts if the entity repaid 90 percent of more of the amounts due 

under all previous loans. HUD may waive this requirement upon 

request by an allocation recipient if the borrower has demonstrated 

satisfactory progress in using outstanding loans and sufficient capacity to use additional loan amounts effectively. HUD may not 

make any loans or enter into any loan commitments after the expiration of a 48-month period following bill enactment. 

Sec. 7. Grants 

The grant amounts may be used by an allocation recipient, a unit 

of local government or a local government entity, or a nonprofit organization. 


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Sec. 8. Eligible housing stimulus activities 

Loan amounts may be used to purchase qualified foreclosed housing for (1) resale as homeownership housing to families having incomes at or below 140 percent of local area median income (AMI) 

and (2) use as rental, lease-purchase, or rent-to-own housing for 

families having incomes at or below 100 percent of local AMI at 

rents that do not exceed comparable market rents. Loan amounts 

may also be used to rehabilitate qualified foreclosed housing to the 

extent necessary to comply with applicable laws, codes, and other 

requirements related to housing safety, quality, and habitability or 

to make improvements to the housing to increase the energy efficiency or conservation of the housing or provide a renewable energy 

source or sources for the housing. Such rehabilitation should be undertaken for the purpose of reselling the housing, to the extent possible, during the 3-month period that begins upon completion of rehabilitation and at a price that is as close as possible to the acquisition price of the housing. 

Grants may be used for (1) operating and holding costs, including 

management costs, taxes, and insurance; (2) incidental costs involved in property acquisition, including reasonable closing costs; 

(3) administrative costs of an allocation recipient in an amount not 

to exceed 8 percent of the sum of the grant amounts provided to 

the allocation recipient; (4) planning costs of an allocation recipient 

in connection with this Act in an amount not to exceed 2 percent 

of the sum of the grant amounts provided to the allocation recipient; and (5) rehabilitation costs to the extent necessary to comply 

with applicable laws, codes, and other requirements related to 

housing safety, quality, and habitability or to make improvements 

to the qualified foreclosed housing to increase the energy efficiency 

or conservation of the housing or provide a renewable energy 

source or sources for the housing. An allocation recipient may not 

use more than 20 percent of its grant amount allocation for qualified rehabilitation activities. 

Grants may not be used to provide down payment assistance for 

homebuyers of single-family housing or to pay any portion of the 

purchase price for qualified foreclosed housing. Grants may be used 

for demolishing qualified foreclosed housing that is deteriorated or 

unsafe. Grants may be used for this purpose only if the Secretary 

determines that the neighborhood or other area in which the housing is located has a high incidence of vacant and abandoned housing and is experiencing a significant decline in population. However, grant and loan amounts may not be used to demolish any 

public housing. 

Grant and loan amounts may not be used for political activities, 

advocacy, lobbying, counseling services, travel expenses, and preparing or providing advice on tax returns. 

At least 50 percent of the grant money must be targeted to house 

very low-income families (defined as those at or below 50 percent 

of local AMI). Not less than half of this money must target extremely low-income families (defined as those at or below 30 percent of local AMI). HUD may establish an alternative percentage 

of less than 50 percent to serve extremely low-income families, if 

an allocation recipient certifies that (1) such allocation recipient 

has attempted to use all other federally related resources available 

to it in combination with the resources available under this Act to 


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meet this requirement and (2) the failure to comply with this requirement will not result in an overall loss of affordable housing 

to families whose incomes do not exceed 30 percent of AMI in the 

allocation recipient’s area. In establishing an alternative percentage, HUD shall take into account the housing needs of families 

whose incomes do not exceed 30 percent of AMI in the allocation 

recipient’s area. 

A State must use a portion of its grant and loan authority 

amount for eligible activities located in rural areas in the State 

that is proportionate to the identified need for such activities in 

these rural areas. 

A State or, at its election, a qualified metropolitan city or urban 

county, will record a lien in the name of the HUD Secretary on any 

foreclosed housing purchased or financed with funds provided by 

this bill in the amount of the principal obligation under the loan 

and interest due under the loan. 

Nothing in the bill prevents the resale of qualified foreclosed 

housing to a prior owner or occupant of such housing who meets 

the income requirements of the Act. The bill prohibits a recipient 

of grant or loan amounts from refusing to lease a dwelling unit to 

a section 8 voucher holder. It also provides eviction protections for 

tenants in foreclosed properties acquired with assistance under this 

Act, including section 8 properties. Specifically, any successor in interest in qualified foreclosed property assisted with funds provided 

under this Act, shall assume such interest subject to (a) the provision, by the successor in interest, of a notice to vacate to any bona 

fide tenant at least 90 days before the effective date of the notice 

to vacate; and (b) the rights of any bona fide tenant, as of the date 

of such notice of foreclosure (i) under any bona fide lease entered 

into before the notice of foreclosure to occupy the premises until 

the end of the remaining term of the lease or the end of the 6- 

month period beginning on the date of the notice of foreclosure, 

whichever occurs first, subject to the receipt by the tenant of the 

90-day notice; or (ii) without a lease or with a lease terminable at 

will under State law, subject to the receipt by the tenant of the 90- 

day notice, except that nothing under this subparagraph shall affect the requirements for termination of any federally subsidized 

tenancy. A lease or tenancy is bona fide if the mortgagor under the 

contract is not the tenant, the lease or tenancy was the result of 

an arms-length transaction, or the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for 

the property. 

Sec. 9. Shared appreciation agreement 

The federal government shall receive 20 percent of any appreciation a property owner who receives assistance under this Act realizes upon resale or disposition of a qualified foreclosed property. 

The federal government shall receive 50 percent of any such appreciation if the owner is a for-profit entity. 

Sec. 10. Spending requirements 

Requires an allocation recipient to (1) begin obligating grant 

amounts and committing loan authority amounts within 120 days 

of qualified plan approval, (2) obligate all such grant amounts and 

enter into loan commitments within 180 days of plan approval, and 


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(3) outlay all such grant amounts and disburse all such loan authority amounts within 24 months of plan approval. HUD may extend each of these periods for up to 5 months upon request by an 

allocation recipient. 

Sec. 11. Servicer contact 

Requires a servicer of a federally related mortgage to notify the 

local government upon becoming responsible for a foreclosed property and provide such local government with the name and 24-hour 

contact information of a representative authorized to negotiate purchases. 

Sec. 12. Accountability 

Requires an allocation recipient that receives a grant or loan authority allocation to report to HUD within 12 months of qualified 

plan approval on its use of this assistance. This report must contain information about the location and type of assisted properties 

and the income of families purchasing or renting these properties. 

HUD shall require a State or other recipient of grant or loan 

funds to reimburse the Treasury for any misused funds. However, 

a State shall not be required to reimburse the Treasury for any 

misused funds that the State is required to allocate to a qualified 

metropolitan city or qualified urban county. 

Sec. 13. Definitions 

Establishes definitions for various terms, including: ‘‘allocation 

recipient,’’ ‘‘allocation recipient administrator,’’ ‘‘approved plan,’’ ‘‘covered multifamily housing,’’ ‘‘loan authority amount,’’ ‘‘nonprofit 

organization,’’ ‘‘qualified foreclosed housing,’’ ‘‘qualified metropolitan city,’’ ‘‘qualified State,’’ ‘‘qualified urban county,’’ ‘‘single family 

housing’’. Specifically, ‘‘allocation recipient’’ is a qualified State, qualified 

metropolitan city, or qualified urban county. ‘‘Covered multifamily housing’’ is defined as a residential structure that consists of 64 or fewer dwelling units. 

‘‘Qualified foreclosed housing’’ is single family housing that is not 

occupied by an owner, pursuant to foreclosure or assignment of the 

mortgage on the housing or forfeiture of the housing; or is covered 

multifamily housing. Such housing must be owned by a lender, 

mortgage company, investor, financial institution, or other such entity, or any government entity, pursuant to foreclosure or assignment of the mortgage on the housing or forfeiture of the housing. 

In the case of single family housing, it must have a purchase price 

that does not exceed 110 percent of the average purchase price for 

single family housing in the area in which the housing is located. 

In the case of covered multifamily housing, the purchase price 

must not exceed the dollar amount limitation, for housing of the 

applicable size located in the area in which the housing is located, 

on the amount of a principal obligation of a mortgage eligible for 

insurance under section 207 of the National Housing Act. 

‘‘Qualified metropolitan city’’ means a city that (1) is among the 

100 most populous incorporated places in the country, as determined by data from the most recent decennial census published before the date of the enactment of this bill or (2) has (a) a minimum 

population of 50,000, as determined by data from the most recent 


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decennial census published before the date of enactment of this bill 

and (b) a foreclosure rate that exceeds 125 percent of the foreclosure rate of the entire State. ‘‘Qualified urban county’’ means an urban county as the term is 

defined in section 102 of the Housing and Community Development 

Act of 1974 that is among the 50 most populous urban counties in 

the country, according to the most recent census data, excluding 

the population of any qualified metropolitan city within such urban 

county, unless such metropolitan city agrees to include its population within the urban county for purposes of this Act. 

The term ’’State’’ means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, Guam, the Virgin Islands, 

American Samoa, and other territory or possession of the United 

States. 

Sec. 14. Funding 

Authorizes $7.5 billion for direct loans and $7.5 billion for grants. 

Sec. 15. Regulations and implementation 

Requires HUD to issue any necessary regulations to carry out 

this Act. HUD also has the authority to take such action as may 

be necessary to implement this Act by notice, guidance, and interim rules. 


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DISSENTING VIEWS 

H.R. 5818, the Neighborhood Stabilization Act of 2008, establishes a $15 billion Federal program to fund $7.5 billion in loans 

and $7.5 billion in grants to states and localities to purchase and 

rehabilitate foreclosed properties. While the stated goal of the legislation is to stabilize housing markets that are experiencing high 

levels of foreclosures, there is no evidence that government intervention in the housing markets and the economy of this kind will 

do anything to achieve that objective, and we must accordingly oppose it. 

For the first half of this decade, housing prices increased at a 

rate that was clearly unsustainable when measured against household incomes and other economic indicators. The market is now in 

the midst of a significant correction, which is a painful process for 

those watching the value of their homes decline, but beneficial to 

those renters and other Americans seeking affordable homeownership opportunities. Contrary to the claims of its proponents, H.R. 

5818 will do little to resolve the root causes of the increase in foreclosures—an excess of housing supply and the depreciation of overinflated home prices. In fact, for the reasons stated below, the legislation could extend and further exacerbate the current housing 

downturn and do more harm than good. 

While we are committed to the goal of stabilizing communities 

and addressing the problems associated with the rising number of 

foreclosures, we do not believe that H.R. 5818 is the right solution 

to those problems. If enacted, H.R. 5818 would represent a costly 

bailout for the lenders, servicers and real estate speculators who 

made risky bets on the housing market and will now be able to offload their foreclosed properties onto the government. Such an approach subsidizes bad investments and contributes to moral hazard 

by signaling to future market participants that their downside 

risks will be assumed by the government if their investments sour. 

Moreover, rather than reducing the number of foreclosures, H.R. 

5818 may actually incentivize lenders to foreclose rather than attempt workouts with struggling homeowners. In a letter from Roy 

A. Bernardi, the Deputy Secretary of the Department of Housing 

and Urban Development, the Bush Administration highlighted this 

concern and went on to note that ‘‘an increase in foreclosures [resulting from these incentives] could well prolong the time it would 

take for the housing market to recover. This new program [established by the legislation] would also be slow to expend money, and 

thus its effects on the market would be delayed and spread out 

over time.’’ H.R. 5818 also includes overly broad income-targeting provisions 

that would allow state and local entities to sell properties to individuals who make up to 140 percent of area median income. This 

represents a government subsidy for families and individuals 


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whose need for federal assistance is questionable. In addition, nothing in the bill prevents the resale of foreclosed properties to a prior 

owner. Allowing homeowners to repurchase from the government 

the same homes that they could not afford in the first place would 

only exacerbate foreclosures and delay a neighborhood’s economic 

recovery. 

H.R. 5818 contemplates the expenditure of $15 billion to fund the 

loans and grants authorized by the legislation, without indicating 

where the money will come from to pay for this massive expansion 

of the Federal Government’s role in the housing market. During 

Committee consideration of the bill, Republican Members offered a 

series of amendments designed to mitigate these costs, but all were 

defeated on largely party-line votes, including an amendment by 

Mr. Price requiring that the legislation comply with pay-go requirements; an amendment by Mr. Hensarling to convert the entire $15 

billion to loans rather being split equally between grants and loans; 

and another amendment by Mr. Hensarling requiring that states 

provide a dollar-for-dollar match for all funds that they receive 

under the bill in the form of grants. 

We intend to continue pushing for much-needed improvements to 

H.R. 5818 as it moves to the House floor, and, absent such improvements, will continue to oppose it. 

SPENCER BACHUS. 

DONALD MANZULLO. 

FRANK D. LUCAS. 

SHELLEY MOORE CAPITO. 

STEVAN PEARCE. 

JEB HENSARLING. 

JIM GERLACH. 

RANDY NEUGEBAUER. 

KEVIN MCCARTHY. 

MICHELE BACHMANN. 

TOM FEENEY. 

JUDY BIGGERT. 

ADAM H. PUTNAM. 

GINNY BROWN-WAITE. 

ED ROYCE. 

WALTER B. JONES. 

K. MARCHANT. 

GEOFF DAVIS. 

SCOTT GARRETT. 

RON PAUL. 

TOM PRICE. 

DEAN HELLER. 

J. GRESHAM BARRETT. 

PETER KING. 

PATRICK T. MCHENRY. 

JOHN CAMPBELL. 

PETER J. ROSKAM. 

Æ 


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